Disaster Risk Financing : Case Studies
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; how...
| Main Author: | |
|---|---|
| Format: | Brief |
| Language: | English |
| Published: |
2012
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2011/03/13972345/disaster-risk-financing-case-studies http://hdl.handle.net/10986/10104 |
| Summary: | 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. |
|---|