One of the critical questions in International Development today is how we solve the burden placed on national budgets and humanitarian aid and organisations when a disaster strikes. Improved financial planning could be the key to not only saving billions of pounds but more importantly saving the lives and improving the livelihoods of many around the world in response to a disaster.
In a world of increasingly unpredictable natural and manmade disasters, how do we better prepare for the financial implications of humanitarian disasters? How do we bring together key actors that have critical roles to play in preparing and organising for disaster management, but also in minimising impacts when disasters hits? How do we reduce our reliance on reactive humanitarian assistance following a disaster?
An increasingly prominent option being explored by donors and the private sector is risk financing, which transfers the financial burden of risk, often away from those most immediately affected. The most talked about approach is insurance, both at the regional, sovereign and local level, which puts coverage in place pre-disaster. However, other instruments and programmes include social protection schemes, reserve emergency funds, contingency debt and insurance linked securities.
Recognising the focus on the topic, on 8th March 2017, DAI Europe and the UCL Institute for Risk and Disaster Reduction welcomed a wide-ranging audience of development practitioners, students, donors and others to a panel discussion on risk financing for the developing world, as part of collaboration to support learning around the EACDS Lot B service providing rapid technical assistance on strengthening resilience. The panel itself brought together similarly diverse perspectives from the donor, academic, practitioner and commercial sectors to discuss the challenges and opportunities of risk financing.
- The need to maintain a focus on encouraging disaster risk reduction alongside introducing insurance and ensuring that conversations do not only focus on risk financing.
- A reminder that there are many risk transfer mechanisms beyond financing (e.g. social protection, safety net programmes, and others) and that the appropriateness of each, or taking a layering approach, is contextual.
- The need to continue to communicate the benefits of disaster risk financing, particularly by focusing on specific local examples of where it has worked.
- An interest in the future of disaster risk financing and how it fits within the wider donor landscape and could be applied to new contexts.
A report with further detail on the challenges and conclusions surrounding risk financing that were discussed during the event can be found here.
The DAI Know How Lab and UCL IRDR would like to extend their thanks to the panellists for their involvement in the event.