Natural disasters financial risk management

LDR

05692nam^^22003613a^4500

001

FI13031101_00001

005

20130801091829.0

006

m^^^^^o^^d^^^^^^^^

007

cr^^n^---ma^mp

008

130307n^^^^^^^^xx^||||^o^^^^^|||^0^eng^d

024

8

|a FI13031101

245

00

|a Natural disasters financial risk management |h [electronic resource] |b Technical and policy underpinnings for the use of disaster-linked financial instruments in Latin America and the Caribbean |y English.

260

|a Washington, DC : |b Inter-American Development Bank (IDB), |c 2010-04.

490

|a Technical notes |n IDB-TN-175 |y English.

506

|a This paper may be freely reproduced.

510

|a Andersen, T., Marcel, M., Collich, G., Focke, K., & Durante, J. J. (2010). Natural disasters financial risk management: technical and policy underpinnings for the use of disaster-linked financial instruments in Latin America and the Caribbean. Inter-American Development Bank (IDB).

520

2

|a The character of catastrophe risks p. 1; Climate change and environmental degradation p. 2; The impact of rapid onset natural catastrophes in Latin America and the Caribbean p. 5; Risk diversification opportunities in the region p. 8; The economic resilience of the LAC region p. 9; Regional risk-transfer markets p. 9; Development challenges in the domestic insurance markets p. 12; Institutionalizing risk management p. 14; Managing exposure to catastrophes p. 15; Imposing risk management p. 15; Prevention and mitigation investment issues p. 20; The role of disaster financing p. 23; Disaster-linked risk financing instruments and strategies p. 25; Retained risk financing instruments p. 25; Main risk transfer instruments p. 27; The integrated disaster risk management and finance approach p. 38; Assesing disaster risk financing effectiveness p. 42; Organizing the risk management offers p. 50; Conclusion p. 51; Bibliography p. 54

520

3

|a This technical note presents the Inter-American Development Bank’s (IDB) methods of financing catastrophe risk. It covers the technical and economic aspects of these instruments as well as the breadth of knowledge amassed over the past few decades that have shaped the Bank’s efforts in Latin America and the Caribbean (LAC). It contends that developing a coherent financial risk management framework is critical, as disasters have become more prevalent and costly to the region. The authors emphasize the emergence of more extreme weather patterns in recent decades, the increased occurrence of disasters, and corresponding economic losses. Total economic loss globally due to natural disasters was about US$230 billion in 2005, US$80 billion in 2007, and US$200 billion in 2008. The magnitude 7.0 quake that hit Haiti on January 12, 2010 killed over 225,000 people, and is estimated to have caused about US$8 billion in economic losses, or approximately 120% of the country’s 2009 GDP. On February 27, 2010, a magnitude 8.8 earthquake hit Chile killing 500 people and causing US$30 billion, about 17 percent of GDP, in economic losses. Economic losses due to such disasters are mounting at four times the rate of GDP growth in the region. On average disasters like these have caused the deaths of about 5,000 people, affected 4 million, and led to losses of more than US$3 billion a year. This is particularly problematic in the LAC region due to the absence of a well-developed insurance environment. In many of these countries, private property and other economic assets are not of consistent quality, thus making assessments of their value difficult. Locations are often not properly recorded, nor are there sufficient and systematic data collection on the occurrence of losses that would allow risks to be thoroughly analyzed. It is on this account that the document calls for the establishment of national risk management systems. Such a process would involve building knowledge on the particular natural hazards that plague countries, as well as reliable public records on exposed economic assets. Such high-quality data could help in the development of various insurance and financial instruments that reduce the long-term impacts of disasters. Developing a systematic approach to risk management also places emphasis on understanding the causes of disaster losses rather than simply reacting to them, thus spurring government policies towards disaster risk reduction (DRR) and preparedness.

520

0

|a Financial Risk Management

533

650

1

|a Natural hazards and disasters |z Latin America |x Earthquakes.

650

1

|a Risk management |z Latin America.

650

0

|a Inter-American Development Bank.

700

1

|a Andersen, Torben |g professor |u Copenhagen Business School.

700

1

|a Marcel, Mario |g Manager of the Institutional Capacity and Finance Sector (ICF) |u Inter-American Development Bank.

700

1

|a Collich, Guillermo |g Principal Financial Markets Specialist, Capital Markets and Financial Institutions Division (CMF) |u Inter-American Development Bank.

700

1

|a Focke, Kurt |g Division Chief of the Capital Markets and Financial Institutions Division (CMF), Institutional Capacity and Finance Sector (ICF) |u Inter-American Development Department.

700

1

|a Durante, Juan José |g Financial Markets Specialist, Capital Markets and Financial Institutions Division (CMF) |u Inter-American Development Department.

710

2

|a Disaster Risk Reduction Program, Florida International University (DRR/FIU), |e summary contributor.

830

0

|a dpSobek.

852

|a dpSobek

856

40

|u http://dpanther.fiu.edu/dpService/dpPurlService/purl/FI13031101/00001 |y Click here for full text

992

04

|a http://dpanther.fiu.edu/sobek/content/FI/13/03/11/01/00001/FI13031101thm.jpg