1. ROLE & IMPORTANCE OF
FINANCE IN DISASTER
MANAGEMENT
A PRESENTATION BY ATUL PANDEY
1

2. PREVIEW
PART 1
WHAT IS A DISASTER, DISASTER MANAGEMENT(DM)& DM CYCLE
PART 2
IMPORTANCE OF DISASTER RISK FINANCE
PART 3
CHALLENGES TO FINANCING DISASTER RISK
PART 4
MECHANISMS OF FINANCING DISASTER RISK
PART 5
SOURCES AND TOOLS OF FINANCE IN DISASTER MANAGEMENT
CONCLUSION
2

3. PART 1:
DISASTER, DISASTER MANAGEMENT
& DM CYCLE
3

4. WHAT IS A DISASTER
A SERIOUS DISRUPTION OF THE FUNCTIONING OF A COMMUNITY
OR A SOCIETY INVOLVING WIDESPREAD HUMAN, MATERIAL,
ECONOMIC OR ENVIRONMENTAL LOSSES AND IMPACTS, WHICH
EXCEEDS THE ABILITY OF THE AFFECTED COMMUNITY OR SOCIETY TO
COPE USING ITS OWN RESOURCES.
A DISASTER CAN BE EITHER NATURAL [RAIN, FLOOD, CYCLONE,
STORM, LAND SLIDES, EARTHQUAKE, VOLCANOES] OR MAN MADE
[WAR INCLUDING BIOLOGICAL, ARSON, SABOTAGE, RIOTS, ACCIDENT
(TRAIN, AIR, SHIP), INDUSTRIAL ACCIDENTS, FIRES (FOREST FIRES), BOMB
EXPLOSIONS, NUCLEAR EXPLOSIONS AND ECOLOGICAL DISASTERS].
4

5. WHAT IS DISASTER MANAGEMENT
 IT IS MORE THAN JUST RESPONSE AND RELIEF (I.E., IT ASSUMES A MORE
PROACTIVE APPROACH)
 IT IS A CONTINUOUS SYSTEMATIC PROCESS (I.E., IS BASED ON THE KEY
MANAGEMENT PRINCIPLES OF PLANNING, ORGANISING, AND
LEADING WHICH INCLUDES COORDINATING AND CONTROLLING)
 AIMS TO REDUCE THE NEGATIVE IMPACT OR CONSEQUENCES OF
ADVERSE EVENTS (I.E., DISASTERS CANNOT ALWAYS BE PREVENTED,
BUT THE ADVERSE EFFECTS CAN BE MINIMISED)
 IT IS A SYSTEM WITH MANY COMPONENTS.
5

6. WHAT IS THE DIFFERENCE
BETWEEN DM AND DRM
6

7.  A COLLECTIVE TERM
ENCOMPASSING ALL ASPECTS
OF PLANNING FOR
PREPARING AND
RESPONDING TO DISASTERS.
 REFERS TO THE MANAGEMENT
OF THE CONSEQUENCES OF
DISASTERS.
DISASTER
MANAGEMENT
7

8. DISASTER RISK
MANAGEMENT
A BROAD RANGE OF ACTIVITIES
DESIGNED TO:
 PREVENT THE LOSS OF LIVES
 MINIMIZE HUMAN SUFFERING
 INFORM THE PUBLIC AND
AUTHORITIES OF RISK
 MINIMIZE PROPERTY DAMAGE
AND ECONOMIC LOSS
 SPEED UP THE RECOVERY
PROCESS
8

9. WHAT IS A DM CYCLE
9

10. PRE DISASTER PHASE
 STRUCTURAL/ NON STRUCTURAL MITIGATION
 CONSTRUCTION OF DAMS, RETAINING WALLS, EMBANKMENTS,
PLANTATION OF MANGROVES.
 IMPLEMENTATION OF GOVT SCHEMES E.G.- WATER SHED
DEVELOPMENT PROGRAM IN WATER DEFICIT REGIONS.
 MEETING THE REQUIREMENT OF MACHINARY & EQUIPMENTS.
 HAZARD, RISK, VULNERABILITY ZONE MAPPING ETC.
NEED FOR FINANCE IN
DISASTER MANAGEMENT

11. POST DISASTER PHASE
 RELIEF CAMPS FOR DISASTER VICTIMS IN SCHOOLS, COMMUNITY HALLS
ETC.
 TO PROVIDE FOOD TO VICTIMS OF AN EVENT.
 TO PROVIDE HEALTH OR MEDICINES FACILITY TO THE INJURED, SICK
ETC.
 COMPENSATION TO OVER COME THE LOSS OF LIFE OR PROPERTY.
 RECONSTRUCTION OF SOCIO ECONOMIC STRUCTURE.
NEED FOR FINANCE IN
DISASTER MANAGEMENT

12. PART 2:
IMPORTANCE OF DISASTER RISK
FINANCE
12

13. DISASTER RISK FINANCE :
PROBLEM AREAS
 NATURAL DISASTERS DEVASTATE LIVES AND LIVELIHOODS ACROSS THE
WORLD AND SLOW DOWN THE DEVELOPMENT PROGRESS ACHIEVED
THROUGH MANY DECADES OF HARD WORK.
 ACCORDING TO THE IFRC WORLD DISASTERS REPORT (2012), THE
FREQUENCY AND INTENSITY OF NATURAL DISASTERS IS INCREASING.
 THE RISKS ARE GREATER AS INCREASING NUMBER OF PEOPLE LIVE IN
VULNERABLE URBAN AREAS; CONSTRUCTION PRACTICES ARE OFTEN
SUBSTANDARD AND INSURANCE COVERAGE IS LOW.
 CONSEQUENTLY THE FISCAL AND ECONOMIC PRESSURE OF DEVELOPING
COUNTRIES HAVING TO DEAL WITH THE ADVERSE EFFECTS OF NATURAL
DISASTERS IS INCREASING, TOO.
13

14.  ALTHOUGH BEST WAY TO COUNTER THE THREAT TO POVERTY
REDUCTION AND SUSTAINABLE DEVELOPMENT IS RISK MITIGATION
BEFORE A DISASTER, FOCUS STILL IS ON DISASTER RELIEF AND
RECONSTRUCTION AFTER A DISASTER.
 ‘LACK OF FINANCIAL RESOURCES’ OFTEN QUOTED AS THE
EXCUSE.
 THE GLOBAL ASSESSMENT REPORT 2011 (UNISDR, 2011:100), SAYS
THAT GOVERNMENT INVESTMENT IN DRM IN COLOMBIA AND
MEXICO, FOR EXAMPLE, IS SIGNIFICANTLY LESS THAN THE
AMOUNT OF MONEY GIVEN OUT IN THE FORM OF TAX EXEMPTIONS.
DISASTER RISK FINANCE :
PROBLEM AREAS
14

15.  GOVERNMENTS DO NOT LACK THE FINANCIAL RESOURCES TO
INVEST IN DRM BUT THEY HAVE NOT IDENTIFIED IT AS A (POLITICAL)
PRIORITY.
 DISASTERS BECOME POLITICAL PRIORITIES ONCE THEY HAVE
OCCURRED AND CAUSED LOSS OF LIVES AND DEVASTATION, AS
SAVING LIVES AND ASSISTING DISASTER VICTIMS IS A
HUMANITARIAN PARADIGM.
 ON THE UP SIDE – MAJOR DISASTERS SOMETIMES ALSO TRIGGER A
REAL OR PERCEIVED SOCIAL DEMAND FOR IMPROVEMENTS IN
DRM.
DISASTER RISK FINANCE :
PROBLEM AREAS
15

16.  HOWEVER, AFTER A DISASTER, THE WINDOW OF OPPORTUNITY
FOR DRM OPENS WIDER IN SOME COUNTRIES THAN IN OTHERS:
 IN SOME COUNTRIES THE SOCIAL DEMAND FOR DRM EITHER TOO
WEAK OR IGNORED, THE STRENGTHENING OF DRM COSMETIC OR
THE INITIAL IMPETUS DIFFICULT TO SUSTAIN (UNISDR, 2011:101).
 COUNTRIES WITH WEAK GOVERNANCE AND LOW INSTITUTIONAL,
FINANCIAL AND HUMAN CAPACITIES WHICH LACK THE
INFORMATION ON THE COSTS AND BENEFITS OF DISASTER RISK
REDUCTION UNABLE TO MEASURE THE OPPORTUNITY COSTS OF
INVESTING IN DRM AND, NEGLECT DISASTER RISK REDUCTION
(DRR).
DISASTER RISK FINANCE :
PROBLEM AREAS
16

17.  SOCIAL AND ECONOMIC COSTS OF A DISASTER BE MADE MORE
VISIBLE (FOR EXAMPLE, IN COLOMBIA, ESTIMATED LOSS FROM
DISASTER IS ABOUT 1% OF GDP WHICH IS COMPARABLE TO THE
COST OF ARMED CONFLICT WHICH WAS ESTIMATED AT 1.1% OF
GDP FOR THE PERIOD 1991-1996, UNISDR 2011:105), AND IF
 GOVERNMENTS TO ACCOUNT FOR RECURRENT DISASTER
LOSSES AND FUTURE LIABILITIES INSTEAD OF TRANSFERRING
IMPACTS TO AFFECTED LOW-INCOME HOUSEHOLDS AND
COMMUNITY
 DRM BE MADE A PUBLIC POLICY PRIORITY SIMILAR TO
CONTROLLING INFLATION OR RESOLVING ARMED CONFLICT.
DISASTER RISK FINANCE :
SOLUTIONS
17

18. PART 3:
CHALLENGES TO
FINANCING DISASTER RISK
18

19. DATA AND REPORTING
19
 DATA ON CONSTITUENTS OF DRR SPENDING DIFFICULT TO COLLECT.
 EXISTING DATA OFTEN NOT REPORTED.
 NO SYSTEMATIC EFFORT TO COMPARE SUCH DATA WORLDWIDE.
 ALTHOUGH MOST COUNTRIES REPORT THE INTEGRATION OF DISASTER
RISK REDUCTION IN PUBLIC INVESTMENT AND PLANNING DECISIONS,
ONLY FEW COUNTRIES ABLE TO PROVIDE DISAGGREGATED
INFORMATION AS TO SPECIFIC INVESTMENTS IN DRR ALLOCATED
FROM NATIONAL BUDGETS.
 DEVELOPING COMPLETE ESTIMATIONS FOR DRR ALLOCATIONS
DIFFICULT AS SPECIFIC ACCOUNTING PROTOCOLS OR CODING FOR
DRR INVESTMENTS DO NOT EXIST.

20. RESPONSIBILITY
20
 THE DISASTER RISK MANAGEMENT FUNCTION IS OFTEN NOT OWNED BY
ANY ONE DEPARTMENT.
 IMPLEMENTATION OF DISASTER RISK REDUCTION ACTIVITIES NOT
BUDGETED AT DEPT LEVEL OR INTEGRATED INTO NORMAL DAY-TO-DAY
OPERATIONS DUE TO LACK OF UNDERSTANDING OF RESPONSIBILITIES.

21. CAPACITY CONSTRAINTS, POST-DISASTER
ASSESSMENTS, MONITORING AND EVALUATION AND
TIMELY RELEASE OF FUNDS
21
 REGIONAL AND NATIONAL REPRESENTATIVES LACK CRITICAL SKILLS
VITAL FOR DISASTER ASSESSMENT VERIFICATION MISSIONS.
 RECONSTRUCTION PROJECTS BADLY IMPLEMENTED, PROCUREMENT OF
FUNDING FOR PROJECTS DELAYED, FUNDS TO THE AFFECTED
POPULATION RELEASED MONTHS, IF NOT YEARS, AFTER A DISASTER HAS
HAPPENED AND MISUNDERSTANDINGS ABOUT PROCEDURES FOR THE
RELEASE OF FUNDS.
 MONITORING AND EVALUATION OF REHABILITATION WORK AT TIMES
NOT EVEN PLANNED FOR, LEADING TO MISAPPROPRIATION OF FUNDS
AND BADLY RECONSTRUCTED FACILITIES THAT AGAIN DO NOT
WITHSTAND FURTHER DISASTERS.

22. LACK OF POLITICAL WILL
22
 LOCAL, PROVINCIAL AND NATIONAL POLITICAL LEADERS DO NOT
UNDERSTAND THE CRUCIAL ROLE OF DISASTER RISK MANAGEMENT.
 LACK OF WILL TO FUND SOMETHING THAT ‘MIGHT NOT HAPPEN’
WHICH MAKES IT DIFFICULT TO GET FUNDS FOR PRO-ACTIVE DISASTER
RISK-REDUCTION PROJECTS.
 POLITICAL LEADERS STILL VERY OFTEN CONSIDER DISASTER
PREVENTION A COST AND NOT AN INVESTMENT.

23. PART 4:
MECHANISMS OF FINANCING
DISASTER RISK
23

24. WorldConferenceon DisasterReduction
18-22January2005, Kobe,Hyogo, Japan
24

25. HYOGO FRAMEWORK FOR ACTION
 GOVERNMENTS AROUND THE WORLD HAVE COMMITTED TO TAKE
ACTION TO REDUCE DISASTER RISK.
 ADOPTED A GUIDELINE TO REDUCE VULNERABILITIES TO NATURAL
HAZARDS, CALLED THE HYOGO FRAMEWORK FOR ACTION (HYOGO
FRAMEWORK, HFA).
 THE HYOGO FRAMEWORK ASSISTS THE EFFORTS OF NATIONS AND
COMMUNITIES TO BECOME MORE RESILIENT TO AND ABLE TO COPE
BETTER WITH THE HAZARDS THAT THREATEN THEIR DEVELOPMENT GAINS
(UNISDR, 2005:1).
 ITS GOAL IS TO BUILD RESILIENCE OF NATIONS AND COMMUNITIES TO
DISASTERS, BY ACHIEVING SUBSTANTIVE REDUCTION OF DISASTER
LOSSES BY 2015 – IN LIVES, AND IN THE SOCIAL, ECONOMIC AND
ENVIRONMENTAL ASSETS OF COMMUNITIES AND COUNTRIES.
25

26. HYOGO FRAMEWORK FOR ACTION
THE FRAMEWORK HAS THREE STRATEGIC GOALS (UNISDR, 2005:4):
1. THE INTEGRATION OF DISASTER RISK REDUCTION INTO SUSTAINABLE
DEVELOPMENT POLICIES AND PLANNING;
2. DEVELOPMENT AND STRENGTHENING OF INSTITUTIONS, MECHANISMS
AND CAPACITIES TO BUILD RESILIENCE TO HAZARDS; AND
3. THE SYSTEMATIC INCORPORATION OF RISK REDUCTION APPROACHES
INTO THE IMPLEMENTATION OF EMERGENCY PREPAREDNESS, RESPONSE
AND RECOVERY PROGRAMMES.
26

27. HYOGO FRAMEWORK FOR ACTION
FURTHERMORE, THE HFA OFFERS FIVE AREAS OF PRIORITIES FOR
ACTION (UNISDR, 2005:2-4):
1. ENSURE THAT DISASTER RISK REDUCTION IS A NATIONAL AND A LOCAL
PRIORITY WITH A STRONG INSTITUTIONAL BASIS FOR IMPLEMENTATION;
2. IDENTIFY, ASSESS AND MONITOR DISASTER RISKS – AND ENHANCE EARLY
WARNING;
3. USE KNOWLEDGE, INNOVATION AND EDUCATION TO BUILD A CULTURE OF
SAFETY AND RESILIENCE AT ALL LEVELS;
4. REDUCE THE UNDERLYING RISK FACTORS; AND
5. STRENGTHEN DISASTER PREPAREDNESS FOR EFFECTIVE RESPONSE AT ALL
LEVELS.
27

28. HYOGO FRAMEWORK FOR ACTION
FOUR CORE INDICATORS FOR THE PRIORITY AREA 1:
1. NATIONAL POLICY AND LEGAL FRAMEWORKS FOR DISASTER RISK
REDUCTION EXIST AND INCLUDE DECENTRALIZED RESPONSIBILITIES AND
CAPACITIES AT ALL LEVELS;
2. DEDICATED AND ADEQUATE RESOURCES ARE AVAILABLE TO IMPLEMENT
DISASTER RISK REDUCTION PLANS ACTIVITIES AT ALL ADMINISTRATIVE
LEVELS;
3. COMMUNITY PARTICIPATION AND DECENTRALIZATION ARE ENSURED BY
DELEGATING AUTHORITY AND RESOURCES TO LOCAL LEVELS; AND
4. A NATIONAL MULTI-SECTORAL PLATFORM FOR DISASTER RISK REDUCTION
IS FUNCTIONING.
28

29. 29

30. 30

31. STAKEHOLDERS IN DISASTER RISK
REDUCTION (DRR)
31

32. DISASTER FINANCING AS A PROPORTION
OF TOTAL INTERNATIONAL AID, 1991-2010)
32
THE INTERNATIONAL
COMMUNITY COMMITTED
OVER $3 TRILLION IN TOTAL
DEVELOPMENT AID IN THE
PERIOD 1991-2010.
OF THIS, $106.7 BILLION WAS
ALLOCATED TO DISASTERS, AND
OF THAT JUST A FRACTION
(12.7%), $13.5 BILLION,
WAS ON RISK REDUCTION
MEASURES BEFORE DISASTERS
STRIKE, COMPARED WITH $23.3
BILLION (21.8%) SPENT ON
RECONSTRUCTION AND
REHABILITATION AND $69.9
BILLION (65.5%) SPENT ON
RESPONSE.
OF THE OVERALL AID
FINANCING OVER 20 YEARS,
THE $13.5 BILLION SPENT ON
DRR ACCOUNTS FOR JUST 0.4%
OF THE TOTAL AMOUNT SPENT
ON INTERNATIONAL AID.

33. THE IMPACT OF DISASTERS : BY COUNTRY
INCOME CLASS
33
HIGH AND
UPPER
MIDDLE
INCOME
COUNTRIES
TOGETHER
ACCOUNT
FOR THE
MOST
NUMBER OF
DISASTERS
(67%) AND
THE BIGGEST
FINANCIAL
LOSSES
(72%) BUT
FOR THE
LOWEST
NUMBER OF
DEATHS
(19%).
LOWER-
MIDDLE
AND LOW
INCOME
COUNTRIES
ACCOUNT
FOR ONLY
33% OF
DISASTERS
BUT FOR 81%
OF ALL
DEATHS.

34. DRR FINANCING ORGANISATIONS
34
THE WORLD BANK
ALONE MANAGES
MORE THAN 63%
OF ALL DRR MONEY
FROM
DEVELOPMENT
BANKS, FUNDING
MECHANISMS AND
AGENCIES:
$4.8 BILLION OF THE
$13.5 BILLION OF
ALL DRR
FINANCING OVER
TWO DECADES.
$36 OF EVERY $100
ALLOCATED TO DRR
OVER THE PERIOD
WAS MANAGED
IN ONE WAY OR
ANOTHER BY THE
WORLD BANK

35. DRR FINANCING COUNTRIES
35
JAPAN IS THE LARGEST
SINGLE DIRECT DONOR TO
DRR.
OVER THE LAST 20 YEARS IT
HAS ACCOUNTED FOR
$3.7 BILLION OF TOTAL
FINANCING.
IN TERMS OF FUNDING
COMING DIRECT FROM
DONORS, IT ACCOUNTS
FOR 64% OF THE TOTAL.
THIS IS OVER EIGHT TIMES
MORE THAN THE SECOND
LARGEST DONOR, THE
EUROPEAN COMMUNITY
($479.5 MILLION) AND
DOUBLE THE AMOUNT
CONTRIBUTED BY ALL
OTHER DONORS
COMBINES.

36. PART 5:
SOURCES & TOOLS OF FINANCE
IN DISASTER MANAGEMENT
36

37. SOURCES OF DISASTER FINANCE
37

38. TOOLS OF DISASTER RISK FINANCE
 A VARIETY OF RISK FINANCING AND OTHER FINANCIAL TOOLS
DEVELOPED TO FACILITATE MANAGEMENT OF RISKS.
 HOWEVER THEY PRIMARILY BENEFIT UPPER AND MIDDLE INCOME
FAMILIES, LARGE BUSINESSES, AND WEALTHY GOVERNMENTS FOR
WHOM THE MARKETS ARE READY TO PROVIDE SUCH TOOLS.
 THOSE LIVING IN POOR COMMUNITIES AND IN AT-RISK, DEVELOPING
COUNTRIES TYPICALLY HAVE LITTLE ACCESS TO FORMAL FINANCING
OPTIONS FOR DISASTER RISK MANAGEMENT.
 THIS IS DUE TO A RANGE OF MARKET GAPS AND FAILURES OF
FORMAL MARKET PRODUCTS TO MEET THE NEEDS OF THE POOR,
PARTICULARLY THOSE WORKING IN THE INFORMAL ECONOMY AND
WITH IRREGULAR CASH FLOWS.
38

39.  COMBINED WITH GREATER EXPOSURE TO RISKS, LACK OF ACCESS TO
EFFECTIVE RISK MANAGEMENT TOOLS MAKES MANY POOR
COMMUNITIES AND PARTICULAR GROUPS VULNERABLE.
 POST-DISASTER ASSISTANCE FROM GOVERNMENTS OR
HUMANITARIAN AGENCIES MAY STEM THE IMPACTS OF THE MOST
DRASTIC EMERGENCIES, BUT THIS ASSISTANCE IS TOO OFTEN ADHOC,
POORLY TARGETED AND FAILS TO REACH OR ASSIST THE MOST
VULNERABLE.
 ROBUST FINANCING TOOLS CAN HELP THE POOR TO BREAK THE
POVERTY CYCLE BY PROTECTING THEIR DEVELOPMENT GAINS,
REDUCING IMPACTS AND LOSSES OF DISASTER SHOCKS, AND
PROVIDING RESOURCES FOR DISASTER PREVENTION AND RISK
MANAGEMENT.
TOOLS OF DISASTER RISK FINANCE
39

40. DEVELOPMENTAL LOOP
SAVINGS
ACCESS
TOCREDIT
INVESTMENT
DEVELOPMENT/
LIVELIHOOD GAINS
RISK
PREVENTION
INSURANCE
/
40

41. MAPPING OF KEY RISK
FINANCING TOOLS
FINANCING MODE
SAVINGS CREDIT INVESTMENT INSURANCE
POOR
HOUSEHOLDS
SMALL
BUSINESSES
MIDDLE
INCOME
HOUSEHOLDS
MICRO FINANCE MICRO INSURANCE
CATASTROPHE
POOLS
COMMUNITY SOCIAL FUNDS
NATIONAL
CATASTROPHE
POOLS/BONDS
REGIONAL/
INTERNATIONAL
L
E
V
E
L
S
41

42. TARGETS OF RISK FINANCE TOOLS
POOR HOUSEHOLDS
 VULNERABLE TO DISASTERS AND OTHER SHOCKS NOT JUST BECAUSE
OF A LACK OF FINANCIAL ASSETS BUT ALSO AS A RESULT OF SOCIAL
AND POLITICAL EXCLUSION (BASED ON CASTE, ETHNIC
IDENTIFICATION, OR GENDER).
 OFTEN MARGINALIZED FROM THE FORMAL ECONOMY, THEY ARE THE
ONES WITH THE LEAST ACCESS TO EFFECTIVE AND EFFICIENT
FINANCING TOOLS.
 WHEN DEVELOPING INNOVATIVE SOLUTIONS IN POOR COMMUNITIES,
IT IS IMPORTANT TO LOOK AT WHICH SEGMENTS OF THE COMMUNITY
ARE REALLY BENEFITING AND WHICH ARE NOT.
 FREQUENTLY THE POOREST OF THE POOR ARE LEFT OUT AND THE
INNOVATIVE PROGRAMS SERVE ONLY TO BROADEN MARKET ACCESS
WITHOUT REALLY ADDRESSING THE MARKET GAPS THEMSELVES.
42

43. SMALL BUSINESSES
 SMALL BUSINESSES PARTICULARLY VULNERABLE TO DISASTER RISKS.
 OFTEN OVERLOOKED AS PROGRAMS ORIENTED MAINLY TOWARD
HOUSEHOLDS AND FAMILIES.
 EFFECTIVE FINANCING FOR RISK MANAGEMENT IS INTIMATELY TIED TO
THE PROMOTION OF STRONG, RESILIENT LIVELIHOODS AND HEALTHY
LOCAL ECONOMIES, AND THE RESILIENCY OF SMALL BUSINESSES IS
CRITICAL FOR EACH OF THESE.
TARGETS OF RISK FINANCE TOOLS
43

44. COMMUNITIES
 COMMUNITIES REPRESENT AN IMPORTANT PART OF RISK DECISION-
MAKING.
 OPERATES BETWEEN THE LEVEL OF INDIVIDUAL FAMILIES AND THAT OF
GOVERNMENT.
 MANY ASPECTS OF RISK MANAGEMENT (E.G. ENSURING THAT
COLLECTIVE WATER AND SANITATION SYSTEMS ARE PROTECTED AND
ABLE TO PROVIDE SERVICES EVEN AFTER DISASTER) NEED TO BE
PLANNED AND MAINTAINED AT THE COMMUNITY LEVEL IN ORDER TO
BE SUSTAINABLE.
TARGETS OF RISK FINANCE TOOLS
44

45. NATIONAL GOVERNMENTS
 POOR COMMUNITIES ALSO DEPEND ON EFFECTIVE REGULATORY
GUIDANCE AND FINANCIAL ASSISTANCE FROM THEIR NATIONAL
GOVERNMENTS FOR BOTH PRE- DISASTER RISK REDUCTION AND POST-
DISASTER RELIEF AND RECOVERY ASSISTANCE.
 TO DO THIS, NATIONAL GOVERNMENTS NEED TO PROTECT THEIR OWN
INVESTMENTS AND MAINTAIN ACCESS TO SUFFICIENT AND READILY
AVAILABLE FINANCIAL RESOURCES.
 YET TOO OFTEN GOVERNMENTS THEMSELVES LACK ACCESS TO
EFFECTIVE RISK FINANCING.
TARGETS OF RISK FINANCE TOOLS
45

46.  RISKS FROM INJURY, SICKNESS, OR DISASTER ARE A CRITICAL DIMENSION
OF POVERTY AND CAN EASILY THREATEN THE SMALL SAVINGS AND
FRAGILE LIVELIHOODS OF POOR FAMILIES.
 MICROFINANCE IS AN EFFECTIVE MEANS FOR STRENGTHENING ACCESS
TO CREDIT, SAVINGS, AND OTHER FINANCIAL SERVICES IN POOR AND
VULNERABLE COMMUNITIES AND HAS CHANGED PERCEPTIONS OF THE
POOR, AND WOMEN IN PARTICULAR, AS UNCREDITWORTHY AND
‘UNBANKABLE’
 MICROFINANCE CAN INCREASE FINANCIAL RESILIENCE BY PROVIDING
ACCESS TO CREDIT AND OTHER FINANCIAL SERVICES TO
 ENABLE INVESTMENT IN HIGHER YIELD LIVELIHOOD STRATEGIES.
 DIVERSIFY LIVELIHOOD STRATEGIES.
 ENABLE INVESTMENT IN RISK REDUCTION MEASURES TO LIMIT
EXPOSURE OF LIVELIHOODS TO DISASTER SHOCKS.
TOOLS OF DISASTER RISK FINANCE:
MICROFINANCE
46

47.  SOCIAL FUNDS ARE PROGRAMS THAT PROVIDE BLOCK GRANTS FOR PROJECTS
TO BUILD UP COMMUNITY ASSETS SUCH AS COMMUNITY FACILITIES,
INFRASTRUCTURE OR IMPROVED SERVICES, INCLUDING MICROFINANCE AND
MICROINSURANCE SERVICES TO BUILD LIVELIHOOD SECURITY AND RESILIENCE
FOR POOR AND VULNERABLE HOUSEHOLDS.
 REPRESENT INNOVATIVE APPROACH TO COMMUNITY-DRIVEN DEVELOPMENT,
ALLOWING LOCAL STAKEHOLDERS TO PRIORITIZE ACTIVITIES AND GUIDE
IMPLEMENTATION DECISION-MAKING.
 TYPICALLY SETUP AND COORDINATED AS AUTONOMOUS GOVERNMENT
AGENCIES AND MAY SERVE AS A CHANNEL FOR FINANCIAL SUPPORT COMING
FROM INTERNATIONAL FINANCIAL INSTITUTIONS OR OTHER DONORS.
 HOWEVER IT IS THE COMMUNITY ROLE THAT DISTINGUISHES SOCIAL FUNDS
FROM OTHER APPROACHES. THE COMMUNITIES THEMSELVES SUBMIT
PROPOSALS AND THE LOCALIZED ADMINISTRATION ALLOWS QUITE SPECIFIC
GEOGRAPHIC AND POVERTY TARGETING AND ENCOURAGES PROPOSALS
DIRECTLY FROM POOR AND VULNERABLE COMMUNITIES.
TOOLS OF DISASTER RISK FINANCE:
SOCIAL FUNDS
47

48.  A POTENTIAL SOLUTION FOR EXTENDING INSURANCE COVERAGE IN POOR
COMMUNITIES
 PROVIDES ACCESS TO POST-DISASTER FINANCIAL RESOURCES IN FAST,
RELIABLE AND PREDICTABLE MANNER ALLOWING THE POOR TO PROTECT
THEIR INVESTMENT AND RETAIN THEIR FINANCIAL GAINS IN THE FACE OF
DISASTERS.
 PROMOTES DIGNITY AND SELF-RELIANCE BY PROVIDING IMMEDIATE
LIQUIDITY TO THE POOR.
 PROMOTE INCREASED LEVELS OF RESILIENCE BY
 INCREASING ACCESS TO FINANCES AFTER SHOCKS THUS
STRENGTHENING COPING AND REDUCING THE LIKELIHOOD OF
DISASTROUS IMPACTS.
 PROVIDING GREATER DISCRETION TO HOUSEHOLDS
AND SMALL BUSINESSES IN PURSUING COPING AND
RECOVERY STRATEGIES.
TOOLS OF DISASTER RISK FINANCE:
MICRO INSURANCE
48

49.  PROVIDE A MECHANISM FOR CATALYZING THE PROVISION OF INSURANCE IN
MARKETS WHERE THERE HAVE BEEN IMPEDIMENTS TO PRIVATE INSURERS
OFFERING DISASTER COVERAGE.
 THESE POOLS TYPICALLY COMBINE A RANGE OF GOVERNMENTAL, PRIVATE
SECTOR AND DONOR SUPPORT – OFTEN FOCUSED ON ADDRESSING DISTINCT
LAYERS OF RISK – TO ENGAGE MARKET INTEREST AND ESTABLISH A VIABLE
INSURANCE FUND.
 THE POOLING CAN BE EITHER AMONG CITIZENS IN A PARTICULAR COUNTRY
OR SET OF COUNTRIES OR AMONG GOVERNMENTS TO LIMIT THEIR OWN
EXPOSURE TO DISASTER RISKS.
 CATASTROPHE POOLS CAN PROMOTE INCREASED LEVELS OF RESILIENCE BY
 INCREASING ACCESS TO FINANCIAL LIQUIDITY AFTER
DISASTER SHOCKS (FOR BOTH INDIVIDUALS AND GOVERNMENTS)
 TRANSFERRING A PORTION OF THE RISK TO EXTERNAL AND/OR
CAPITAL MARKETS
TOOLS OF DISASTER RISK FINANCE:
CATASTROPHE POOLS/BONDS
49

50. TOOLS OF DISASTER RISK FINANCE:
OTHER TOOLS
CONDITIONAL CASH TRANSFERS
 CASH TRANSFERS AND PUBLIC WORKS BOLSTER SAFETY NETS AND
PROMOTE HOLISTIC SOCIAL RISK MANAGEMENT.
 SUPPORT LOCAL CHOICE AND SELF-MANAGEMENT IN DRIVING
RECOVERY AND PRIORITIZING INVESTMENTS FOR LIVELIHOODS
DEVELOPMENT AND RESILIENCE.
 USED IN PARTICULAR TO PROTECT CHILDREN’S SCHOOL ENROLMENT
FROM BEING AFFECTED BY ADVERSE RISK COPING.
 THE INCOME HELPS POOR HOUSEHOLDS AVOID SALE OF ASSETS,
FOREGOING OF HEALTH EXPENDITURES, OR WITHDRAWAL OF
CHILDREN FROM SCHOOL.
 PUBLIC WORKS PROGRAMS USED TO STRENGTHEN LABOR MARKETS
TO PROTECT AGAINST THE RISK OF UNEMPLOYMENT AND ALSO TO
SUPPORT PUBLIC INVESTMENTS THAT CAN LINK TO PREVENTION
STRATEGIES.
50

51. TOOLS OF DISASTER RISK FINANCE:
OTHER TOOLS
CASH FOR WORK PROGRAMS.
 BASIC EMPLOYMENT PROGRAMS WITH THE WORK TARGETED
TOWARD SOCIAL OR COMMUNITY OBJECTIVES.
 HELP TO RESTORE EARNING CAPACITY AND LIVELIHOODS, REPAIR
AND RECONSTRUCT DISASTER DAMAGE, AND CONTRIBUTE TO LONG-
TERM DEVELOPMENT.
 AFTER THE INDIAN OCEAN TSUNAMI IN 2004, A NUMBER OF
AGENCIES ESTABLISHED CASH GRANT PROGRAMS TO SUPPORT THE
HOUSING RECONSTRUCTION.
 IN SRI LANKA THE GOVERNMENT-ORGANIZED OWNER-DRIVEN
HOUSING RECOVERY PROGRAM REQUIRED THAT HOUSES
RECONSTRUCTED UNDER THE PROGRAM BE BUILT ON REINFORCED
CONCRETE PILLARS TO REDUCE DAMAGE IN FUTURE TSUNAMIS.
 COMBINATION OF TECHNICAL ASSISTANCE AND CASH GRANTS USED
EFFECTIVELY FOR THE TRANSITIONAL SHELTER PROGRAM ORGANIZED
BY THE IFRC IN YOGYAKARTA AFTER THE EARTHQUAKE IN 2006.
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52. TOOLS OF DISASTER RISK FINANCE:
OTHER TOOLS
ALTERNATIVE CURRENCIES
 COMPLEMENTARY OR LOCAL CURRENCIES USED IN A NUMBER OF
LOCATIONS TO STIMULATE LOCAL ECONOMIC ACTIVITY BY ISSUING A
SCRIP CURRENCY TO FACILITATE THE EXCHANGE OF LOCAL SERVICES
IN AREAS WHERE AVAILABILITY OF THE NATIONAL CURRENCY IS
LIMITED (AS IT MIGHT BE IN POOR COMMUNITIES).
 THESE TYPES OF ALTERNATIVE CURRENCIES HAVE BEEN USED TO
SUPPORT LOCAL DEVELOPMENT, INCLUDING IN POST-DISASTER
RECOVERY CONTEXTS.
52

53. TOOLS OF DISASTER RISK FINANCE:
OTHER TOOLS
INSURANCE FOR DISASTER RESERVES FOR PRIVATE COMPANIES
UNITED NATIONS ENVIRONMENT PROGRAMME FINANCE INITIATIVE
(UNEP FI) CURRENTLY EXPLORING A PROGRAM THAT WOULD OFFER
INSURANCE TO COMPANIES IN LIEU OF MAINTAINING RESERVES FOR
RESPONDING TO DISASTER EVENTS, THUS ALLOWING THOSE COMPANIES
TO INVEST MUCH OF THE FUNDS THAT WOULD HAVE BEEN PUT IN THESE
RESERVES IN OTHER WAYS.
CONTINGENT CREDIT
GOVERNMENTS OR PRIVATE SECTOR COMPANIES OBTAIN THE RIGHT TO
TAKE OUT A PRE-SPECIFIED POST-DISASTER LOAN THAT IS REPAID ON
FIXED TERMS , PROVIDING IMMEDIATE LIQUIDITY AFTER A DISASTER.
SUCH CREDIT MIGHT BE OFFERED AS PART OF A DEVELOPMENT AID
PACKAGE TO GOVERNMENTS OR IN EXCHANGE FOR AN ANNUAL FEE.
53

54. CONCLUSION
54

55. RECAPITULATION
 THE COST OF DISASTERS IS INCREASING, AND VULNERABLE PEOPLE
(ELDERLY, WOMEN, CHILDREN), AND NATIONS (DEVELOPING
COUNTRIES) ARE BEING DISPROPORTIONALLY AFFECTED.
 DEVELOPMENT ASSISTANCE FOR DRR IS A SMALL FRACTION OF TOTAL
INTERNATIONAL AID FINANCE. ONLY A SMALL AMOUNT OF FUNDS
ARE ALLOCATED SPECIFICALLY FOR DRR PURPOSES.
 WITHIN DRR FUNDING, MUCH OF THE EXPENDITURE AND ATTENTION IS
FOCUSED ON DISASTER PREPAREDNESS AND RECOVERY, RATHER
THAN ON UNDERSTANDING AND MITIGATING THE UNDERLYING
CAUSES OF VULNERABILITY.
 DEVELOPMENT ASSISTANCE FOR DRR IS CONCENTRATED IN A SMALL
NUMBER OF COUNTRIES. POORER AND DROUGHT PRONE COUNTRIES
ARE INADEQUATELY REPRESENTED.
 FUNDS FOR DRR COME FROM VARIED SOURCES AND TARGET
MANIFOLD ASPECTS OF DISASTER RISK; THIS MAKES UNDERSTANDING
FUNDING MECHANISMS, AND THEIR IMPACT ON DRR, DIFFICULT.
55

56.  DATA ON NATIONAL EXPENDITURE FOR DRR ARE SCARCE BUT
EVIDENCE THAT DOES EXIST DEMONSTRATES ITS IMPORTANCE.
 NEW FUNDS ARE INCREASINGLY BEING ALLOCATED TO MITIGATE THE
EFFECTS OF CLIMATE CHANGE AND BUILD RESILIENCE TO EXTREME
CLIMATE EVENTS.
 RISK REDUCTION AND MANAGEMENT SHOULD BE PUT AT THE CENTRE
OF THE DEVELOPMENT AGENDA. HOWEVER DRR FINANCE INVOLVES
MORE THAT JUST DEVELOPMENT ASSISTANCE.
 GOVERNMENT (PUBLIC SECTOR) AND PRIVATE SECTOR CAN BOTH
PLAY A CRUCIAL ROLE IN FINANCING DRR. THE PRIVATE SECTOR IS
INVESTING IN RISK REDUCTION AND MAKING CHOICES BASED ON
RISK AND RESILIENCE CONSIDERATIONS.
 INTERNATIONAL AGREEMENTS (E.G. SENDAI FRAMEWORK FOR DRR
2015- 2030) CAN PLAY A HUGE ROLE IN CATALYSING DRR ACTIVITIES
IN DISASTER-PRONE COUNTRIES.
RECAPITULATION
56

57. THANK YOU
57