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Boosting Financial Resilience to Disaster Shocks : Good Practices and New Frontiers - World Bank Technical Contribution to the 2019 G20 Finance Ministers’ and Central Bank Governors’ Meeting (English)

Governments face growing contingent liabilities from disasters as they tend to shoulder a significant share of disaster response and recovery costs. Disaster shocks increase government expenditure and hamper economic activities. An increasing number of countries are developing financial protection strategies - a suite of policies and financial instruments - as part of their macro-fiscal policy to secure access to pre-arranged financing and protect the fiscal balance and budget when disasters strike. Investments in physical and social resilience complement and reinforce financial resilience. Pre-arranged risk financing can help governments reduce the fiscal cost of disasters. Sovereign catastrophe risk pools, established to help especially low-capacity countries better access financial markets, are evolving toward multifunctional platforms to strengthen financial resilience in their region. Governments are moving toward adopting more sophisticated risk financing strategies that better match financial instruments to their liabilities, especially for public assets (including infrastructure), national-subnational cost sharing, and social safety nets. New technology and innovations such as Earth Observation Data, Fintech, and big data have the potential to significantly enhance and boost systems for financial resilience against disaster shocks. Development partners continue to play a critical role in helping developing countries improve their financial protection strategies. Recent experiences of G20 countries and others have led to three new frontiers on innovative crisis and disaster risk finance. Although significant progress has been achieved in disaster risk finance, some limitations and challenges remain. All successful reforms start with concrete first steps and an ongoing focus on enhancing fundamental systems and institutions. Financial resilience requires the leadership of ministries of finance in coordination with other public agencies and the private sector. At the request of G20 Finance Track members, this discussion note was prepared to: (i) take stock of the developments in fiscal management of disaster risks within the broader macro-fiscal framework; (ii) highlight recent progress by individual countries and the international community; and (iii) present new frontiers in disaster risk finance.

Details

  • Author

    Mahul,Olivier, Signer,Benedikt Lukas, Hamada,Hideaki, Gamper,Catherine Desiree, Xu,Rui, Himmelfarb, Anne [Editor]

  • Document Date

    2019/01/01

  • Document Type

    Working Paper

  • Report Number

    137550

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2019/06/07

  • Disclosure Status

    Disclosed

  • Doc Name

    Boosting Financial Resilience to Disaster Shocks : Good Practices and New Frontiers - World Bank Technical Contribution to the 2019 G20 Finance Ministers’ and Central Bank Governors’ Meeting

  • Keywords

    market based instrument; disaster risk financing and insurance; Disaster Risk Finance; catastrophe risk; contingent liability; contingent liabilities; ministries of finance; access to international market; public financial management system; financial resilience; financial protection; impact of disaster; public asset; financial risk management; disaster risk assessment; Catastrophe Risk Insurance; debt sustainability analysis; financial instrument; disbursement of fund; risk transfer instrument; Social Safety Nets; gross domestic product; economies of scale; risk pool; allocating public resources; Fiscal Risk Management; asset and liability; private sector insurance; sovereign disaster risk; business continuity plan; mobilization of funds; risk management framework; risk of conflict; Private Sector Window; access to fund; large multinational firms; stable financial market; international financial institution; class of bond; risk management decision; sound financial decision; union member state; response to shock; increase in expenditure; disaster risk management; allocation of fund; international capital market; participating country; disaster shocks; financing instrument; cat bond

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Citation

Mahul,Olivier Signer,Benedikt Lukas Hamada,Hideaki Gamper,Catherine Desiree Xu,Rui Himmelfarb, Anne [Editor]

Boosting Financial Resilience to Disaster Shocks : Good Practices and New Frontiers - World Bank Technical Contribution to the 2019 G20 Finance Ministers’ and Central Bank Governors’ Meeting (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/239311559902020973/Boosting-Financial-Resilience-to-Disaster-Shocks-Good-Practices-and-New-Frontiers-World-Bank-Technical-Contribution-to-the-2019-G20-Finance-Ministers-and-Central-Bank-Governors-Meeting