Using Probabilistic Models to Appraise and Decide on Sovereign Disaster Risk Financing and Insurance
This paper presents an overview of the structure of probabilistic catastrophe risk models, discusses their importance for appraising sovereign disaster risk financing and insurance instruments and strategy, and puts forward a model and a process fo...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/07/24744805/using-probabilistic-models-appraise-decide-sovereign-disaster-risk-financing-insurance http://hdl.handle.net/10986/22237 |
| Summary: | This paper presents an overview of the
structure of probabilistic catastrophe risk models,
discusses their importance for appraising sovereign disaster
risk financing and insurance instruments and strategy, and
puts forward a model and a process for improving decision
making on the linked disaster risk management strategy and
sovereign disaster risk financing and insurance strategy.
The paper discusses governments use of probabilistic
catastrophe models to inform sovereign disaster risk
financing decision making and describes the ex ante and ex
post financing instruments available for responding to
extreme natural events. It also discusses the challenge of
appraising sovereign disaster risk financing and insurance
instruments, including a review of the multiple dimensions
of disaster risks and the value that probabilistic
catastrophe risk models provide. The decision making
framework for sovereign disaster risk financing and
insurance put forward by the paper includes the use of a
decision model (an influence diagram) as a rigorous
representation of the relationships between the decisions,
uncertain events, and consequences relevant to sovereign
disaster risk financing and insurance decision making. The
framework also includes a process for generating
high-quality customized components for the decision model,
and a tool for designing coherent sovereign disaster risk
financing and insurance strategies. The paper ends with
suggestions for improving catastrophe risk models to
facilitate sovereign disaster risk financing and insurance
decision making. |
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