Advancing Risk Assessments for Financial Applications

Event Summary

Session Leads

• Dr. Olivier Mahul, World Bank
• Laura Boudreau, World Bank

Description

Robust disaster risk information and management systems are fundamental for effective financial protection against natural disasters. Disaster risk information enables the quantification of the expected cost of disasters at the macro-level (e.g., economic losses to society and fiscal losses to the government) and at the micro-level (e.g., losses to homeowners, firms, and agricultural producers). Risk assessment empowers decision-makers at all levels to understand and own their exposure to natural hazards. This understanding can help them to design financial protection strategies and conduct cost-benefit analysis of investments in risk mitigation. Furthermore, during and following a disaster, data on the event’s parameters and inflicted damage and losses are essential to determine funding requirements and prioritization for disaster response.

Advancements in assessment of disaster risk data and their financial applications are fostering new and more cost- and time-efficient disaster risk financing and insurance solutions. Natural disasters represent a growing challenge to financial and fiscal risk management in developing countries; particularly in emerging economies, significant increases in people and assets at risk translate into exponential increases in disaster losses. Financial and fiscal risk assessment, relying on robust disaster risk information, allows the design of a disaster risk financing strategies at all levels and helps lower the costs of risk financing products. The development of risk financing strategies can ensure that catastrophic risks are transferred to the private sector and that post-disaster funding needs are matched.

This UR session will explore how the public and private sectors are pursuing disaster risk assessment with applications for disaster risk financing. The session will set out to understand the opportunities and challenges in this space and how these efforts fit in to the broader disaster risk management context. Presentations and a panel discussion will cover numerous approaches and contexts for advancing risk assessment for disaster risk financing; the roles of the public and private sectors, including collaborative public-private partnerships, will be examined.