The Impacts of Disaster Risk on Sovereign Asset and Liability Management

Implicit contingent liabilities, such as those generated by natural disasters, are often not quantified in the government balance sheet. However, when they materialize, they place pressure on government finances that may raise interest expenditures...

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Main Author:	World Bank
Format:	Report
Language:	English
Published:	World Bank, Washington, DC 2021
Subjects:	SOVEREIGN DEBT NATURAL DISASTER DISASTER RISK MANAGEMENT PUBLIC FINANCE
Online Access:	http://documents.worldbank.org/curated/undefined/303611630572516822/The-Impacts-of-Disaster-Risk-on-Sovereign-Asset-and-Liability-Management http://hdl.handle.net/10986/36256

id	okr-10986-36256
recordtype	oai_dc
spelling	okr-10986-362562021-09-15T05:10:59Z The Impacts of Disaster Risk on Sovereign Asset and Liability Management World Bank SOVEREIGN DEBT NATURAL DISASTER DISASTER RISK MANAGEMENT PUBLIC FINANCE Implicit contingent liabilities, such as those generated by natural disasters, are often not quantified in the government balance sheet. However, when they materialize, they place pressure on government finances that may raise interest expenditures and financial risks. Understanding the impacts of disaster risk on sovereign assets and liabilities plays a key part in understanding the potential impact of sovereign disaster risk finance strategies which allow governments to reduce the costs and risks of disasters using prearranged financing and insurance methods. Applying the Sovereign Asset and Liability Management (SALM) framework is a new and comprehensive way of looking at the potential impact of a disaster on the public sector balance sheet through assets and liabilities. This paper introduces a framework that identifies three channels through which natural disaster will impact SALM. This framework is applied in three case studies, Peru, Serbia and New Zealand to derive lessons about the potential impact of natural disasters on the sovereign balance sheet and highlight the importance of accounting for disaster impacts across public sector balance sheets. The application of SALM can increase countries’ resilience to financial shocks posed by disaster risk through improved understanding of the impacts of disaster risk on both sides of the sovereign balance sheet. Going forward it could even be used to define a country’s risk tolerance to disaster risk, monitor changes in this position and help to inform policy design on disaster risk and where needed support the introduction of financial instruments to manage disaster risk. 2021-09-14T18:18:17Z 2021-09-14T18:18:17Z 2021-08-31 Report http://documents.worldbank.org/curated/undefined/303611630572516822/The-Impacts-of-Disaster-Risk-on-Sovereign-Asset-and-Liability-Management http://hdl.handle.net/10986/36256 English Equitable Growth, Finance and Institutions Insight; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work Economic & Sector Work :: Other Financial Sector Study New Zealand Peru Serbia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	SOVEREIGN DEBT NATURAL DISASTER DISASTER RISK MANAGEMENT PUBLIC FINANCE
spellingShingle	SOVEREIGN DEBT NATURAL DISASTER DISASTER RISK MANAGEMENT PUBLIC FINANCE World Bank The Impacts of Disaster Risk on Sovereign Asset and Liability Management
geographic_facet	New Zealand Peru Serbia
relation	Equitable Growth, Finance and Institutions Insight;
description	Implicit contingent liabilities, such as those generated by natural disasters, are often not quantified in the government balance sheet. However, when they materialize, they place pressure on government finances that may raise interest expenditures and financial risks. Understanding the impacts of disaster risk on sovereign assets and liabilities plays a key part in understanding the potential impact of sovereign disaster risk finance strategies which allow governments to reduce the costs and risks of disasters using prearranged financing and insurance methods. Applying the Sovereign Asset and Liability Management (SALM) framework is a new and comprehensive way of looking at the potential impact of a disaster on the public sector balance sheet through assets and liabilities. This paper introduces a framework that identifies three channels through which natural disaster will impact SALM. This framework is applied in three case studies, Peru, Serbia and New Zealand to derive lessons about the potential impact of natural disasters on the sovereign balance sheet and highlight the importance of accounting for disaster impacts across public sector balance sheets. The application of SALM can increase countries’ resilience to financial shocks posed by disaster risk through improved understanding of the impacts of disaster risk on both sides of the sovereign balance sheet. Going forward it could even be used to define a country’s risk tolerance to disaster risk, monitor changes in this position and help to inform policy design on disaster risk and where needed support the introduction of financial instruments to manage disaster risk.
format	Report
author	World Bank
author_facet	World Bank
author_sort	World Bank
title	The Impacts of Disaster Risk on Sovereign Asset and Liability Management
title_short	The Impacts of Disaster Risk on Sovereign Asset and Liability Management
title_full	The Impacts of Disaster Risk on Sovereign Asset and Liability Management
title_fullStr	The Impacts of Disaster Risk on Sovereign Asset and Liability Management
title_full_unstemmed	The Impacts of Disaster Risk on Sovereign Asset and Liability Management
title_sort	impacts of disaster risk on sovereign asset and liability management
publisher	World Bank, Washington, DC
publishDate	2021
url	http://documents.worldbank.org/curated/undefined/303611630572516822/The-Impacts-of-Disaster-Risk-on-Sovereign-Asset-and-Liability-Management http://hdl.handle.net/10986/36256
_version_	1764484881003315200

The Impacts of Disaster Risk on Sovereign Asset and Liability Management

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