The Global Platform for Disaster Risk Reduction conducted a side event at the 2022 UNDRR Global Platform for DRR meeting on 25 May 2022 titled ‘Towards Greater Financial Resilience: Enhancing the Global Disaster Risk Finance Architecture’.
The panelists at the session were:
Developing nations around the world face numerous climate-related hazards and the most vulnerable people are severely affected, especially as financing for risk is limited with more resources being mobilised to fight the global pandemic.
With Germany assuming the presidency of the G7 summit this year, building adaptation and resilience to climate change through risk financing has gained key momentum for discussion among may stakeholders. In this backdrop, a plenary of perspectives from the Government of the Philippines, the Atlantic Council, BMZ, WFP, and SLYCAN Trust discussed how donor nations and developing nations could work in partnership with relevant non-state actors to enhance climate disaster risk finance architecture.
German Federal Ministry for Economic Cooperation and Development (BMZ)Director for Climate, Energy and Environment Heike Henn highlighted their vision to work towards a Global Shield against Climate Risks by working with various partners at national, regional, and international levels to understand vulnerabilities, quantify the gaps in protection, and scale-up support for smart management of risk.
Henn focussed on Germany’s efforts as a donor nation at the G7 on strengthening cooperation within the global Climate and Disaster Risk Finance and Insurance (CDRFI) architecture.
The Republic of the Philippines Department of Finance Assistant Secretary Paola Alvarez spoke about the common issues faced by developing nations with climate vulnerabilities and high-risk exposure, referring to the Philippines’ experience with Typhoon Haiyan.
The Philippines, a country which is emerging from an economic recession, has allocated most of its national funds to manage the COVID-19 pandemic and is challenged with mobilising finance. It is focused on working towards increasing accessibility to climate risk finance, strengthening legal frameworks, and providing smart capital, risk premium support, and micro finance to affected parties.
Currently the Philippines is engaged in peer-to-peer learning from neighbouring countries and mechanisms of the ASEAN, APCAC, G20 and G7.
UN World Food Programme Climate and Disaster Risk Reduction Programmes Chief Gernot Laganda highlighted how global economic shocks, especially with the crisis in Ukraine, had caused food systems to break down all over the world. In fact, 39 countries and 48 million people are in life-threatening situations in a food crisis.
To sustain food systems, sovereign insurance and risk insurance must be made available to those in vulnerable positions. Laganda highlighted the work of the African Risk Capacity (ARC) Group, a Specialised Agency of the African Union, which has developed contingency plans, parametric (index) insurance contracts, and certain thresholds for insurance pay-outs.
Laganda highlighted that initiatives such as the Global Shield were necessary to coordinate insurance subsidies around loss and damage.
SLYCAN Trust Executive Director Vositha Wijenayake highlighted the crucial role that multiple actors, especially civil society actors, play to scale-up action on climate risk finance through policy processes, with multi-stakeholder engagement ensuring accountability.
Wijenayake highlighted the gaps in risk assessments, specifically technical gaps, which need to be closed through multi-actor partnerships. She noted that it is important for developing countries to be able to identify their priorities and build baselines to assess the climate and disaster risks, which will help them build pilot projects to access climate and disaster risk finance building on existing mechanisms and scaling them up, as opposed to duplicating.
She cited the example of crop insurance in Sri Lanka, which had existed for many decades and could to be built on and scaled-up to be able to increase resilience to climate-induced disasters. She further highlighted the need to focus on evidence and quantifiable measuring of action taken for monitoring and evaluation purposes.
It was identified during the discussion that epistemic communities could pool in their knowledge of risk profiles of individual countries to make assessments of gaps, needs, and vulnerabilities and share case studies of both best practices in climate risk insurance and entry points.
It was also highlighted that inclusive and participatory processes were essential in building resilience to climate and disaster risks and that it was imperative to ensure all actors worked together to link the local, national, and global levels in achieving collective actions, leading to enhanced resilience for all through evidence-based policy and solutions at all levels.