Naholo broke his leg on debut against Argentina last month and sought out alternative treatment in Fiji in an effort to make the World Cup and had said earlier he expected to be fit for the All Blacks' third pool game against Georgia on Oct. 2.
"One of the things we have done throughout the whole selection process is risk and reward," Hansen told reporters. "Yes he is injured but he is on the road to recovery and should be fit for the third game.
"In effect he will miss only one game because the first two are four days apart and he wouldn't have played both of those anyway.
"The reward is that he is a try-scoring machine, he is X-factor and he brings something to the team that others don't.
"We can't win this World Cup by having something ordinary, we need something different and he provides that."
Naholo was jogging with no pain, Hansen said though he was unsure if his decision to seek alternative treatment had been a factor in his being 10 days ahead of his expected recovery.
"Our medical staff are open minded people. Alternative medicines have been around for a long time," Hansen said.
"Has that treatment made the process quicker? I don't know... but our medical crew are happy with his progress."
NEW PLAYERS
The 24-year-old Naholo joins winger Nehe Milner-Skudder and hooker Codie Taylor as the only players capped in 2015 in the squad.
Richie McCaw will captain the side in his fourth World Cup as he seeks to become the first player to lift the Webb Ellis trophy for a second time.
Milner-Skudder and Naholo in effect were the only surprises in an otherwise predictable squad with 17 forwards and 14 backs with the emphasis on the backs being their versatility to cover numerous positions.
Beauden Barrett and Colin Slade were picked as backups for flyhalf Dan Carter, with Lima Sopoaga unlucky to be left out of the squad after an impressive debut against South Africa.
Hansen, however, said that Barrett and Slade were also specialist flyhalves, who could play other positions if needed, which had tipped the selection in their favour.
Much of the debate surrounding the squad had been on the composition of the back three with Ben Smith and Julian Savea considered certainties with Milner-Skudder, Charles Piutau and 2011 World Cup winners Israel Dagg and Cory Jane competing for the last two spots before Naholo's recovery.
Jane and Dagg have been hampered by injury this season and had little chance to prove themselves, something Hansen acknowledged.
He named six loose forwards, with Liam Messam and Victor Vito both included after they had been considered to be competing for one place in the mix.
Just three specialist locks, Sam Whitelock, Brodie Retallick and Luke Romano, were named to accommodate the loose forwards, though Hansen felt Vito, Kieran Read and Jerome Kaino would be adequate lineout options.
"Again we looked at the risk and reward and the big reward was taking an extra loose forward, who will have a high workload," Hansen added.
"It gives us the opportunity to put two loose forwards on the bench and gives us the versatility in how we want to play late in the game."
(Compiled by Greg Stutchbury; Editing by John O'Brien/Sudipto Ganguly)
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