Disaster Risk Financing: Opportunities for Regional Cooperation in Asia and the Pacific

Disaster Risk Financing: Opportunities for Regional Cooperation in Asia and the Pacific

Date: 
Thursday, June 28, 2018
Type: 
Public information and advocacy materials
Abstract

Disaster risk financing is gaining more recognition for its ability to build resilience to external natural catastrophe shocks because of its three key enablers: a) improving risk assessment and awareness; b) developing coordinated and pre-agreed post-disaster plans; and, c) implementing effective financial protection measures

To a large extent this momentum emanates from the experience gained from sovereign risk pools in the Caribbean (Caribbean Catastrophe Risk Insurance Facility, CCRIF), Africa (African Risk Capacity, ARC) and the Pacific (the Pacific Catastrophe Risk Insurance Company, PCRIC). These sovereign risk pools have effectively helped governments safeguard national budgets and protect the lives of their citizens against the impacts of disaster.

In some cases, these sovereign risk pools have catalysed sub-sovereign initiatives at the meso-level (e.g. loan portfolio default protection for lending institutions, especially for low-income populations and sectors particularly exposed to natural disaster risk such as agriculture) and at the micro level (e.g. weather index micro-insurance). Other meso-level and micro level risk financing schemes have been piloted around the world, though with mixed results, facing challenges in scaling up and/or not meeting client or sponsor expectations.

In this report, after global good practices and lessons learned have been assessed and the benefits of regional cooperation analysed, the possibility of ESCAP setting up a regional facility for risk pooling is further explored. It is suggested that this could be done by creating a dedicated Multi-Donor Trust Fund which could provide both risk capital and supporting knowledge products and services.

Please visit ESCAP webpage at http://www.unescap.org/disaster-preparedness-fund and http://www.unescap.org/our-work/ict-disaster-risk-reduction for related background materials.

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