Covid-19 and Risk Management: Lessons Learned in Costa Rica to Face the Next Crisis
Organizer: ARX Consultores
| In the session, Kathryn Milliken and Andrea Camargo from the World Food Programme (WFP) will present the Risk Finance Strategy for LAC and the risk layered approach adopted by WFP Guatemala. Edgar Uribe (Swiss Re) and Iker Llabres (MiCRO) are going to present the work behind the design of the weather index microinsurance product that will be piloted in Guatemala from April 2021 with Aseguradora Rural. Background: The Latin America and Caribbean (LAC) region is exposed to a diversity of shocks threatening communities’ livelihoods and food security. Building resilience of the most vulnerable and food insecure is a priority for WFP, with risk financing playing an important role. The Regional Office of WFP in Latin America and the Caribbean adopted in 2020 a Risk Financing Strategy to encourage the adoption of innovative, responsible, sustainable and scalable risk financing tools to build resilience of the most vulnerable and food insecure. Inspired by this regional strategy, Guatemala is adopting a layered approach where the complementarity between microinsurance, forecast-based financing (FbF), and macro and meso risk financing tools is at the core. Other countries such as Dominica, Cuba, Dominican Republic, Haiti and El Salvador are currently exploring the pathways to integrate risk financing tools within their programmes. WFP Guatemala, in collaboration with Swiss Re (reinsurance coverage), Aseguradora Rural (local reinsurer) and the Microinsurance Catastrophe Risk Organisation (MiCRO) (technical design of the product), has worked on the integration of a weather index microinsurance product covering drought and excess rain into their programmes to boost resilience and productivity of smallholder farmers and microentrepreneurs. In order to ensure sustainability, WFP Guatemala designed a scalable and sustainable strategy that requires linking the microinsurance product with supply value chains. The product is awaiting the approval of the Guatemalan supervisory authority, Superintendencia de Bancos (SIB).The Covid-19 pandemic caught most nations unaware of its implications. Response was rapid once realities started to appear as inevitable; sanitary measures were applied when feasible, even if improvisation and trial-and-error prevailed. But almost nowhere pre-arranged risk management notions, procedures and protocols were and are still not applied. An opportunity was lost to minimize losses and most of all, to prepare to face for the next crisis, derived either from natural as well as anthropogenic hazards, and their respective vulnerabilities. Costa Rica was not an exception to this panorama. The Covid-19 pandemic arrived at Costa Rica in March 2020 in the middle of an intense fiscal and social crisis. It was initially faced as a dangerous “surprising and unexpected” situation. Its sanitary management was successful (until now) thanks to a robust social health and medicine system and because the President of the Republic stepped aside and left its conduction to the Ministry of Health (an epidemiologist) and the President of the Social Security Authority (a biochemist); science became a priority. The National Emergency and Disaster Risk Management Commission, in charge of coordinating and organizing the primary response, acted vigorously. This response was inspired by experiences gathered while facing natural hazards. However, management has been essentially reactive and business continuity has not been an active goal. The rest of the risk management toolbox spectrum has not been used: participative risk understanding, social risk communication, risk reduction through prevention and mitigation procedures, risk financing and protection through retention, transfer instruments and residual risk determinations, open real-time data access and discussion, and most of all that it becomes critical to acknowledge the fact that the “post” of this event is inevitably the “pre” of the next one…In the session, Kathryn Milliken and Andrea Camargo from the World Food Programme (WFP) will present the Risk Finance Strategy for LAC and the risk layered approach adopted by WFP Guatemala. Edgar Uribe (Swiss Re) and Iker Llabres (MiCRO) are going to present the work behind the design of the weather index microinsurance product that will be piloted in Guatemala from April 2021 with Aseguradora Rural. Background: The Latin America and Caribbean (LAC) region is exposed to a diversity of shocks threatening communities’ livelihoods and food security. Building resilience of the most vulnerable and food insecure is a priority for WFP, with risk financing playing an important role. The Regional Office of WFP in Latin America and the Caribbean adopted in 2020 a Risk Financing Strategy to encourage the adoption of innovative, responsible, sustainable and scalable risk financing tools to build resilience of the most vulnerable and food insecure. Inspired by this regional strategy, Guatemala is adopting a layered approach where the complementarity between microinsurance, forecast-based financing (FbF), and macro and meso risk financing tools is at the core. Other countries such as Dominica, Cuba, Dominican Republic, Haiti and El Salvador are currently exploring the pathways to integrate risk financing tools within their programmes. WFP Guatemala, in collaboration with Swiss Re (reinsurance coverage), Aseguradora Rural (local reinsurer) and the Microinsurance Catastrophe Risk Organisation (MiCRO) (technical design of the product), has worked on the integration of a weather index microinsurance product covering drought and excess rain into their programmes to boost resilience and productivity of smallholder farmers and microentrepreneurs. In order to ensure sustainability, WFP Guatemala designed a scalable and sustainable strategy that requires linking the microinsurance product with supply value chains. The product is awaiting the approval of the Guatemalan supervisory authority, Superintendencia de Bancos (SIB). |
Speakers:
Sergio Mora Castro, Consultant at ARX