Disaster Risk Financing

Nearly 90 per cent of disasters caused by natural hazards are linked to weather, water and climate-related extremes. When a disaster happens, it not only threatens human life, but also has profound impacts on various economic sectors and social systems, setting back development in many countries, particularly those with least resources. Natural hazards pose a serious risk to the global society and inflict significant economic impact and loss of human lives. Over the period of 1980-2010, the total economic losses resulting from great and devastating natural disasters have amounted to US$ 2 500 billion (in 2010 values), of which US$ 600 billion were insured.

The comparison of the losses over time shows a persistent trend for an increase in the number of events and their damage to the economy, with the atmospheric perils that include weather, hydrological and climate-related hazards have been increasingly dominating the global risk exposure and account for the lion’s share of all events with 78 per cent. As demonstrated over and over again, geographic distribution of impact differs dramatically between developed and developing countries.

Given the extensive socio-economic impacts associated with hydro-meteorological hazards and conditions, availability of hydro-meteorological and climate information is critical for risk assessment and development of strategies for risk reduction and financial risk transfer.

The sixteenth session of the World Meteorological Congress (May 2011) requested the WMO Secretary-General to facilitate the development of weather, hydrological and climate services for insurance and other financial risk transfer markets, under the crosscutting framework of WMO DRR Services and as a contribution to the Global Framework for Climate Services (GFCS).

WMO DRR User-Interface Expert Advisory Group on Climate Services for Disaster Risk Financing (EAG-CSDRF)

In this regard the WMO established the EAG-CSDRF to identify requirements for climate services for disaster risk financing in order to develop WMO guidelines for NMHS based on documentation of good practices in this area (EAG-CSDRF Terms of Reference - PDF). A concrete work plan has been developed to identify, document and synthesize good practices in this area and develop relevant requirements and guidelines for climate services to support different sectors in this area (see Table 1 and Table 2). Members of the EAG-CSDRF include, internationally recognized experts from (re)insurance, sector and other financial institutions, international agencies that are facilitating these markets in the developing countries, as well as experts from academia and climate research community as well as number of National Meteorological and Hydrological Services (NMHSs) with experience in serving these markets (see membership of WMO EAG-CSFRF (2012-2015)).

Since 2007, WMO DRR Services division has facilitated a number of activities to better understand the needs and requirements of the disaster risk financing stakeholders and to support the development of weather, water and climate services to these stakeholders. The following is a list of these activities:

WMO meetings related to Disaster Risk Financing

Sources:

• Munich Re (2010). Natural Catastrophes 2010: Analyses, assessments, positions. Report published in Topic Geo 2010.
• Swiss Re (2011). Natural Catastrophes and Man-made Disasters in 2010: A Year of Devastating and Costly Events. Sigma No.1/2011.