The Global Fund to Fight AIDS, Tuberculosis and Malaria needs to improve its risk management, a panel formed to probe allegations of corruption at health body said.
"The Global Fund's mission and portfolio inherently come with different levels and types of risk, and the institution should cater to risky environments sensibly," it said.
The panel, co-chaired by former US Health and Human Services secretary Michael Leavitt and Botswana ex-president Festus Mogae, was formed following allegations in December 2010 that tens of millions of dollars earmarked for programmes in African nations had gone missing.
The allegations prompted two donor countries, Germany and Sweden, to suspend contributions.
The panel, which made six categories of recommendations, said the Global Fund needed to draw up a set of "clear, simple, and practical basic standards in the rules of fiduciary documentation and ethical behaviour."
It should also establish "clear definitions of the categories of risk it faces, and discuss them with donors".
The group acknowledged however that "unlike banks or other financial institutions, the Global Fund cannot avoid risks by simply denying funding; lives are at risk, and the very purpose of the organisation is to save them."
Created in 2002 with seed money from software mogul Bill Gates, the Fund is the single largest source of international health financing for the three diseases which together claim more than four million lives each year.
In 2009, the Global Fund, a private-public partnership, accounted for 20 percent of international public funding for HIV, 65 percent for TB and 65 percent for malaria.
The panel said the failure of the fund "would be a global catastrophe".
In a statement released Monday, the Global Fund said it welcomed the recommendations.