Climate and Disaster Risk Management (#DRM) has gained importance on international
agendas, from the Paris Climate Agreement to the Sendai Framework for Disaster Risk Reduction. The main idea behind DRM is to focus on managing the risks that turn hazards into disasters.
Traditionally, DRM focused on four phases of #climaterisk and #climateinsurance: Prevention, Preparedness, Response, and Recovery. However, as experts have pointed out, this approach misses an important phase: Retention & Transfer. Residual risks not only remain but are escalating with new climate crises that are hard to predict. How can new models and insurance products work to transfer these risks to capital markets?
This was the aim of a 4-year study by @MunichRe and @GIZ, concluded in June 2019, under its program: Advancing Climate Risk Insurance Plus (#ACRI+). The project focused on the renewable energy sector in #Barbados, the urban resilience sector in China, and the Micro, Small, and Medium-sized Enterprises (MSMEs) sector in Morocco.
For our #Blueeconomy interests, the Barbados project is particularly relevant, as it focused on a Small Island Developing State (SIDS). How to protect the strategic priority of renewable energy from climate risk? Renewables are given top billing on many sustainable investment allocations, especially to developing nations. But if they are not made climate resilient, especially in island and coastal nations on the front-line of climate change, then those investments are in vain.
This is the theme of our Resilient Asian Ports Finance Initiative (RAPFI): How to finance both Green and Resilient port assets across developing Asia.
ACRI+ developed an Integrated Climate Risk Management (ICRM) approach to update the old DRM models with risk transfer mechanisms. This helps avert potentially huge economic losses and speed the release of funds after natural disasters. We recommend the ACRI+ study, and others by groups like InsuReslience Global Partnership, as insurance and finance work together to fill the climate resilience gap worldwide.