Disaster Risk Financing : Case Studies

Poundrik, Sandeep

Disaster Risk Financing : Case Studies

Autores

Descripción

In this note, the instruments supporting risk retention and risk financing at the national and regional/international levels will be the sole focus. Risk transfer, including insurance, is a very broad subject and requires a separate discussion; however, when a hybrid solution involves a transfer of risk or an instrument at the household or community level, a brief explanation of the instrument ensues. To this end, the note reviews examples generally considered to be good practices in the sector and seeks to elucidate well-regarded risk retention instruments and financing. The choice of instruments in disaster risk financing depends on many factors. One way of looking at it is to classify the disasters in terms of their expected severity and frequency. More frequent disasters with low expected severity are better financed by retaining the risk, as the cost of transferring such risk will be disproportionately high compared to the expected damages or payments. On the other hand, risk associated with low frequency-high severity disasters is best transferred to the international reinsurance market, as government may not have the capacity and resources to sustain the damages caused by such disasters. Finally, as the case studies in this note indicate, the uptake of risk retention and risk transfer mechanisms has made countries more resilient to natural disaster.

Palabras clave

ATTACHMENT POINT, BORROWER, BORROWING CAPACITY, BUDGET CONSTRAINTS, CAPITAL REQUIREMENT, CATASTROPHE BONDS, CATASTROPHE FUND, CATASTROPHIC EVENT, CLIMATE CHANGE, COVERAGE, CREDIBILITY, CREDIT LINE, DAMAGES, DEBT, DEBT BURDEN, DECLARATION, DEVELOPING COUNTRIES, DEVELOPMENT ORGANIZATIONS, DISASTER, DISASTER MANAGEMENT, DISASTER MANAGEMENT ACTIVITIES, DISASTER MITIGATION, DISASTER MITIGATION MEASURES, DISASTER PREPAREDNESS, DISASTER RECOVERY, DISASTER REDUCTION, DISASTER RISK, DISASTERS, DISBURSEMENT, DISBURSEMENTS, DIVERSIFIED PORTFOLIO, DROUGHT, DROUGHTS, EARLY WARNING, EARLY WARNING SYSTEM, EARLY WARNING SYSTEMS, EARTHQUAKE, EARTHQUAKES, EMERGENCY DECREES, EMERGENCY MANAGEMENT, EMERGENCY OPERATIONS, EMERGENCY PLAN, EMERGENCY RELIEF, EMERGENCY RESPONSES, EMERGENCY SITUATIONS, EXPROPRIATIONS, FINANCES, FINANCIAL SUPPORT, FLOODS, FOOD RELIEF, FOOD SECURITY, FORGIVENESS, FUNGIBLE, GLOBAL MARKET, HEALTH CARE, HOLDING, HUMANITARIAN ASSISTANCE, HURRICANE, HURRICANES, IMPACT OF DISASTERS, INSTRUMENT, INSURANCE, INSURANCE COMPANIES, INSURANCE COVERAGE, INSURANCE POLICIES, INSURANCE POLICY, INSURANCE POOLS, INSURANCE PREMIUM, INSURERS, INTERNATIONAL AGENCIES, INTERNATIONAL FINANCIAL MARKETS, INVESTING, INVESTMENT INSTRUMENTS, INVESTMENT INSURANCE, LEGAL FRAMEWORK, LEGISLATIVE FRAMEWORK, LINE OF CREDIT, LIQUIDITY, LIQUIDITY PROBLEMS, LOAN, LOAN AMOUNT, LOAN REPAYMENT, LOCAL GOVERNMENTS, LOW INCOME FARMERS, MATURITY, MICRO FINANCE, MICRO INSURANCE, NATIONAL EMERGENCY, NATURAL DISASTER, NATURAL DISASTERS, NATURAL HAZARDS, OIL PRICES, OPPORTUNITY COST, POLITICAL ECONOMY, PREMIUM PAYMENT, PREMIUMS, PROGRAMS, RECONSTRUCTION, REINSURANCE, REINSURANCE MARKETS, RELIEF, RESERVE, RESERVE FUND, RESERVE FUNDS, RESERVES, RETURN, RISK INSURANCE, RISK MANAGEMENT, RISK MANAGEMENT SYSTEM, RISK POOLING, RISK TRANSFER, SAVINGS, SMALL BUSINESSES, SWAPS, TAX, TRANSFER RISK, TRANSPARENCY, TREASURY, TRUST DEED, TRUST FUND, VICTIMS, WAR, WEATHER EVENTS, WIND SPEED