Evaluating Sovereign Disaster Risk Finance Strategies : A Framework

This paper proposes a framework for ex ante evaluation of sovereign disaster risk finance instruments available to governments for funding disaster losses. The framework can be used by governments to help choose between different financial instrume...

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Main Authors:	Clarke, Daniel, Mahul, Olivier, Poulter, Richard, Teh, Tse Ling
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	CONTINGENT LIABILITIES LINE OF CREDIT HOLDING LIABILITY DEVELOPING COUNTRIES FINANCIAL MANAGEMENT RISK PROFILE VALUATION INTEREST RATE OF RETURN CLAIM PAYMENT RISK NEUTRAL CONTINGENT LIABILITY MORAL HAZARD INSURANCE PRODUCT INTEREST RATE OPTION EXCHANGE STRATEGIES SERVICES FINANCIAL CRISES REPAYMENTS PUBLIC SERVICES PORTFOLIO BONDS MARKET INSTRUMENTS LOAN DEBT REPAYMENTS PRICING PROJECTS RESERVE FUND GOVERNMENT ACCOUNTS CLAIM PAYMENTS SAVING RESERVE INTERNATIONAL BANK INSTRUMENTS SAFETY NETS BUDGET PRESENT VALUE SAVINGS CURRENCY NATURAL DISASTER DISBURSEMENT INSURANCE MARKETS FINANCES FIXED COSTS INTEREST RATES INSURANCE PRODUCTS NATURAL DISASTERS FINANCIAL INSTITUTIONS MARKETS DEBT INTERNATIONAL DEVELOPMENT CATASTROPHE BONDS RETURN LENDERS LIQUID MONEY LOANS RESERVES GOVERNMENT FINANCING FINANCE BANK POLICY INFRASTRUCTURE BANKS EXPENDITURE TRANSACTIONS SOVEREIGN DEBT OPPORTUNITY COST GOVERNMENT BUDGET OPPORTUNITY COSTS FINANCIAL TRANSACTIONS FINANCIAL INSTRUMENT MINISTRIES OF FINANCE SOVEREIGN RISK FUTURE VALUE PRIVATE FINANCIAL SECTOR BANK RETURNS FINANCIAL INSTRUMENTS CREDIT BUDGETS COLLATERALIZATION PUBLIC BUDGET GOVERNMENT EXPENDITURE SAFETY NET PRICE RISK REPAYMENT EXPENDITURES FISCAL YEAR INSURANCE PREMIUM MARKET DEFAULT LOCAL CURRENCY LEVY INSURANCE INSURANCE PREMIUMS CONTINGENT DEBT GOVERNMENT DEBT INVESTMENT RISK BOND INDIRECT COST FINANCIAL MARKETS INSTITUTIONAL DEVELOPMENT MONEY MARKET MONEY MARKET INSTRUMENTS BORROWING INVESTMENTS RISK MANAGEMENT LENDING SWAPS INSURANCE COMPANIES INSTRUMENT GOVERNMENTS LIABILITIES ARREARS BOND PREMIUM ECONOMIC CONDITIONS INVESTING
Online Access:	http://documents.worldbank.org/curated/en/2016/06/26510520/evaluating-sovereign-disaster-risk-finance-strategies-framework http://hdl.handle.net/10986/24637

id	okr-10986-24637
recordtype	oai_dc
spelling	okr-10986-246372021-04-23T14:04:23Z Evaluating Sovereign Disaster Risk Finance Strategies : A Framework Clarke, Daniel Mahul, Olivier Poulter, Richard Teh, Tse Ling CONTINGENT LIABILITIES LINE OF CREDIT HOLDING LIABILITY DEVELOPING COUNTRIES FINANCIAL MANAGEMENT RISK PROFILE VALUATION INTEREST RATE OF RETURN CLAIM PAYMENT RISK NEUTRAL CONTINGENT LIABILITY MORAL HAZARD INSURANCE PRODUCT INTEREST RATE OPTION EXCHANGE STRATEGIES SERVICES FINANCIAL CRISES DEVELOPING COUNTRIES REPAYMENTS PUBLIC SERVICES PORTFOLIO BONDS MARKET INSTRUMENTS LOAN DEBT REPAYMENTS PRICING PROJECTS RESERVE FUND GOVERNMENT ACCOUNTS INTEREST RATE CLAIM PAYMENTS SAVING RESERVE INTERNATIONAL BANK INSTRUMENTS SAFETY NETS BUDGET PRESENT VALUE SAVINGS CURRENCY NATURAL DISASTER MORAL HAZARD DISBURSEMENT INSURANCE MARKETS INSURANCE PRODUCT FINANCES FIXED COSTS INTEREST RATES INSURANCE PRODUCTS NATURAL DISASTERS RESERVE FUND FINANCIAL INSTITUTIONS MARKETS DEBT INTERNATIONAL DEVELOPMENT FINANCIAL CRISES CATASTROPHE BONDS INTEREST RATES RETURN INTERNATIONAL DEVELOPMENT LENDERS LIQUID MONEY PUBLIC SERVICES LOANS RESERVES GOVERNMENT FINANCING FINANCE BANK POLICY INFRASTRUCTURE CONTINGENT LIABILITY BANKS EXPENDITURE TRANSACTIONS SOVEREIGN DEBT RISK NEUTRAL OPPORTUNITY COST GOVERNMENT BUDGET OPPORTUNITY COSTS FINANCIAL TRANSACTIONS FINANCIAL INSTRUMENT MINISTRIES OF FINANCE INSURANCE PRODUCTS SOVEREIGN RISK FUTURE VALUE PRIVATE FINANCIAL SECTOR CLAIM PAYMENT BANK RETURNS FINANCIAL INSTRUMENTS CREDIT BUDGETS COLLATERALIZATION PUBLIC BUDGET OPPORTUNITY COST GOVERNMENT EXPENDITURE SAFETY NET PRICE RISK FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENT REPAYMENT EXPENDITURES CATASTROPHE BONDS NATURAL DISASTER FISCAL YEAR OPPORTUNITY COSTS BANK POLICY INSURANCE PREMIUM MARKET DEFAULT LOCAL CURRENCY RISK PROFILE FINANCIAL INSTITUTIONS LEVY INSURANCE INSURANCE PREMIUMS CONTINGENT DEBT GOVERNMENT DEBT PRICE RISK INVESTMENT RISK BOND SAFETY NETS INDIRECT COST MINISTRIES OF FINANCE FINANCIAL MARKETS DEBT REPAYMENTS INSTITUTIONAL DEVELOPMENT INSTITUTIONAL DEVELOPMENT MONEY MARKET MONEY MARKET INSTRUMENTS BORROWING INVESTMENTS RISK MANAGEMENT LENDING CONTINGENT LIABILITIES SWAPS INSURANCE COMPANIES INSTRUMENT LINE OF CREDIT GOVERNMENTS LIABILITIES ARREARS GOVERNMENT ACCOUNTS BOND PREMIUM FINANCIAL TRANSACTIONS ECONOMIC CONDITIONS NATURAL DISASTERS INVESTING This paper proposes a framework for ex ante evaluation of sovereign disaster risk finance instruments available to governments for funding disaster losses. The framework can be used by governments to help choose between different financial instruments, or between different combinations of instruments, to achieve appropriate and financially efficient strategies to fund disaster losses, taking into account the risk of disasters, economic conditions, and political constraints. The paper discusses the framework in the context of a hypothetical country, with parameters selected to represent a disaster-prone small island state. The paper shows how a mix of instruments can be chosen to minimize the economic opportunity cost given the underlying disaster risk faced and prevailing economic and financial conditions. 2016-07-07T21:18:59Z 2016-07-07T21:18:59Z 2016-06 Working Paper http://documents.worldbank.org/curated/en/2016/06/26510520/evaluating-sovereign-disaster-risk-finance-strategies-framework http://hdl.handle.net/10986/24637 English en_US Policy Research Working Paper;No 7721 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	CONTINGENT LIABILITIES LINE OF CREDIT HOLDING LIABILITY DEVELOPING COUNTRIES FINANCIAL MANAGEMENT RISK PROFILE VALUATION INTEREST RATE OF RETURN CLAIM PAYMENT RISK NEUTRAL CONTINGENT LIABILITY MORAL HAZARD INSURANCE PRODUCT INTEREST RATE OPTION EXCHANGE STRATEGIES SERVICES FINANCIAL CRISES DEVELOPING COUNTRIES REPAYMENTS PUBLIC SERVICES PORTFOLIO BONDS MARKET INSTRUMENTS LOAN DEBT REPAYMENTS PRICING PROJECTS RESERVE FUND GOVERNMENT ACCOUNTS INTEREST RATE CLAIM PAYMENTS SAVING RESERVE INTERNATIONAL BANK INSTRUMENTS SAFETY NETS BUDGET PRESENT VALUE SAVINGS CURRENCY NATURAL DISASTER MORAL HAZARD DISBURSEMENT INSURANCE MARKETS INSURANCE PRODUCT FINANCES FIXED COSTS INTEREST RATES INSURANCE PRODUCTS NATURAL DISASTERS RESERVE FUND FINANCIAL INSTITUTIONS MARKETS DEBT INTERNATIONAL DEVELOPMENT FINANCIAL CRISES CATASTROPHE BONDS INTEREST RATES RETURN INTERNATIONAL DEVELOPMENT LENDERS LIQUID MONEY PUBLIC SERVICES LOANS RESERVES GOVERNMENT FINANCING FINANCE BANK POLICY INFRASTRUCTURE CONTINGENT LIABILITY BANKS EXPENDITURE TRANSACTIONS SOVEREIGN DEBT RISK NEUTRAL OPPORTUNITY COST GOVERNMENT BUDGET OPPORTUNITY COSTS FINANCIAL TRANSACTIONS FINANCIAL INSTRUMENT MINISTRIES OF FINANCE INSURANCE PRODUCTS SOVEREIGN RISK FUTURE VALUE PRIVATE FINANCIAL SECTOR CLAIM PAYMENT BANK RETURNS FINANCIAL INSTRUMENTS CREDIT BUDGETS COLLATERALIZATION PUBLIC BUDGET OPPORTUNITY COST GOVERNMENT EXPENDITURE SAFETY NET PRICE RISK FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENT REPAYMENT EXPENDITURES CATASTROPHE BONDS NATURAL DISASTER FISCAL YEAR OPPORTUNITY COSTS BANK POLICY INSURANCE PREMIUM MARKET DEFAULT LOCAL CURRENCY RISK PROFILE FINANCIAL INSTITUTIONS LEVY INSURANCE INSURANCE PREMIUMS CONTINGENT DEBT GOVERNMENT DEBT PRICE RISK INVESTMENT RISK BOND SAFETY NETS INDIRECT COST MINISTRIES OF FINANCE FINANCIAL MARKETS DEBT REPAYMENTS INSTITUTIONAL DEVELOPMENT INSTITUTIONAL DEVELOPMENT MONEY MARKET MONEY MARKET INSTRUMENTS BORROWING INVESTMENTS RISK MANAGEMENT LENDING CONTINGENT LIABILITIES SWAPS INSURANCE COMPANIES INSTRUMENT LINE OF CREDIT GOVERNMENTS LIABILITIES ARREARS GOVERNMENT ACCOUNTS BOND PREMIUM FINANCIAL TRANSACTIONS ECONOMIC CONDITIONS NATURAL DISASTERS INVESTING
spellingShingle	CONTINGENT LIABILITIES LINE OF CREDIT HOLDING LIABILITY DEVELOPING COUNTRIES FINANCIAL MANAGEMENT RISK PROFILE VALUATION INTEREST RATE OF RETURN CLAIM PAYMENT RISK NEUTRAL CONTINGENT LIABILITY MORAL HAZARD INSURANCE PRODUCT INTEREST RATE OPTION EXCHANGE STRATEGIES SERVICES FINANCIAL CRISES DEVELOPING COUNTRIES REPAYMENTS PUBLIC SERVICES PORTFOLIO BONDS MARKET INSTRUMENTS LOAN DEBT REPAYMENTS PRICING PROJECTS RESERVE FUND GOVERNMENT ACCOUNTS INTEREST RATE CLAIM PAYMENTS SAVING RESERVE INTERNATIONAL BANK INSTRUMENTS SAFETY NETS BUDGET PRESENT VALUE SAVINGS CURRENCY NATURAL DISASTER MORAL HAZARD DISBURSEMENT INSURANCE MARKETS INSURANCE PRODUCT FINANCES FIXED COSTS INTEREST RATES INSURANCE PRODUCTS NATURAL DISASTERS RESERVE FUND FINANCIAL INSTITUTIONS MARKETS DEBT INTERNATIONAL DEVELOPMENT FINANCIAL CRISES CATASTROPHE BONDS INTEREST RATES RETURN INTERNATIONAL DEVELOPMENT LENDERS LIQUID MONEY PUBLIC SERVICES LOANS RESERVES GOVERNMENT FINANCING FINANCE BANK POLICY INFRASTRUCTURE CONTINGENT LIABILITY BANKS EXPENDITURE TRANSACTIONS SOVEREIGN DEBT RISK NEUTRAL OPPORTUNITY COST GOVERNMENT BUDGET OPPORTUNITY COSTS FINANCIAL TRANSACTIONS FINANCIAL INSTRUMENT MINISTRIES OF FINANCE INSURANCE PRODUCTS SOVEREIGN RISK FUTURE VALUE PRIVATE FINANCIAL SECTOR CLAIM PAYMENT BANK RETURNS FINANCIAL INSTRUMENTS CREDIT BUDGETS COLLATERALIZATION PUBLIC BUDGET OPPORTUNITY COST GOVERNMENT EXPENDITURE SAFETY NET PRICE RISK FINANCIAL INSTRUMENTS FINANCIAL INSTRUMENT REPAYMENT EXPENDITURES CATASTROPHE BONDS NATURAL DISASTER FISCAL YEAR OPPORTUNITY COSTS BANK POLICY INSURANCE PREMIUM MARKET DEFAULT LOCAL CURRENCY RISK PROFILE FINANCIAL INSTITUTIONS LEVY INSURANCE INSURANCE PREMIUMS CONTINGENT DEBT GOVERNMENT DEBT PRICE RISK INVESTMENT RISK BOND SAFETY NETS INDIRECT COST MINISTRIES OF FINANCE FINANCIAL MARKETS DEBT REPAYMENTS INSTITUTIONAL DEVELOPMENT INSTITUTIONAL DEVELOPMENT MONEY MARKET MONEY MARKET INSTRUMENTS BORROWING INVESTMENTS RISK MANAGEMENT LENDING CONTINGENT LIABILITIES SWAPS INSURANCE COMPANIES INSTRUMENT LINE OF CREDIT GOVERNMENTS LIABILITIES ARREARS GOVERNMENT ACCOUNTS BOND PREMIUM FINANCIAL TRANSACTIONS ECONOMIC CONDITIONS NATURAL DISASTERS INVESTING Clarke, Daniel Mahul, Olivier Poulter, Richard Teh, Tse Ling Evaluating Sovereign Disaster Risk Finance Strategies : A Framework
relation	Policy Research Working Paper;No 7721
description	This paper proposes a framework for ex ante evaluation of sovereign disaster risk finance instruments available to governments for funding disaster losses. The framework can be used by governments to help choose between different financial instruments, or between different combinations of instruments, to achieve appropriate and financially efficient strategies to fund disaster losses, taking into account the risk of disasters, economic conditions, and political constraints. The paper discusses the framework in the context of a hypothetical country, with parameters selected to represent a disaster-prone small island state. The paper shows how a mix of instruments can be chosen to minimize the economic opportunity cost given the underlying disaster risk faced and prevailing economic and financial conditions.
format	Working Paper
author	Clarke, Daniel Mahul, Olivier Poulter, Richard Teh, Tse Ling
author_facet	Clarke, Daniel Mahul, Olivier Poulter, Richard Teh, Tse Ling
author_sort	Clarke, Daniel
title	Evaluating Sovereign Disaster Risk Finance Strategies : A Framework
title_short	Evaluating Sovereign Disaster Risk Finance Strategies : A Framework
title_full	Evaluating Sovereign Disaster Risk Finance Strategies : A Framework
title_fullStr	Evaluating Sovereign Disaster Risk Finance Strategies : A Framework
title_full_unstemmed	Evaluating Sovereign Disaster Risk Finance Strategies : A Framework
title_sort	evaluating sovereign disaster risk finance strategies : a framework
publisher	World Bank, Washington, DC
publishDate	2016
url	http://documents.worldbank.org/curated/en/2016/06/26510520/evaluating-sovereign-disaster-risk-finance-strategies-framework http://hdl.handle.net/10986/24637
_version_	1764457246182342656

Evaluating Sovereign Disaster Risk Finance Strategies : A Framework

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