Financial Risk Analytics for Informed Sovereign Disaster Risk Financing Decision Making
Evaluating the level of financial protection and associated costs of sovereign disaster risk financing and insurance (DRFI) decisions is challenging. DRFI strategies are often presented as a combination of financial instruments, such as domestic re...
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| Format: | Brief |
| Language: | English en_US |
| Published: |
Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2015/07/24794178/financial-risk-analytics-informed-sovereign-disaster-risk-financing-decision-making http://hdl.handle.net/10986/22419 |
| Summary: | Evaluating the level of financial
protection and associated costs of sovereign disaster risk
financing and insurance (DRFI) decisions is challenging.
DRFI strategies are often presented as a combination of
financial instruments, such as domestic reserves, contingent
credit and catastrophe risk transfer instruments. However,
governments usually lack tools to help them evaluate and
quantify the costs and benefits of such strategies and
answer questions like: what should be the annual budget
allocation for post-disaster response? What should be the
size of domestic reserves? What should be the amount of
contingent credit? Shall government purchase catastrophe
risk transfer instruments? Financial risk analytics helps
the decision makers evaluate the financial costs and
benefits of sovereign DRFI strategies. Understanding the
financial implications of alternative sovereign DRFI
strategies requires detailed financial analysis. For
example, understanding the tradeoff between the quality of
financial coverage and its price requires some quantitative
financial analysis. The results of financial analysis can
also be used to document and justify the process of
sovereign DRFI decision making. |
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