The World Bank Group, in partnership with the governments of the UK and Germany, has announced the launch of a US $145 million Global Risk Financing Facility (GRiF) to help vulnerable countries manage the financial impact of natural catastrophes and climate change.
The Group explained that this kind of disaster risk finance, alongside re/insurance mechanisms, can help governments have the funds in place when they need to respond to shocks, while promoting better preparedness and risk reduction.
“Natural disasters push some 26 million people into poverty each year as people struggle with the economic fallout of earthquakes, hurricanes, floods and other catastrophes” said World Bank CEO Kristalina Georgieva.
“We can’t stop all these terrible events, but we can help countries with insurance or other risk finance so people get faster help to rebuild,” she added.
Over the next five years, the GRiF will provide financing to set up mechanisms like national disaster insurance programs that can help channel money to people affect by disasters when they need it.
Activities to be financed by the facility include insurance premiums, contingent risk transfer solutions, investments in operating costs and risk pools, loans for new approaches to debt sustainability, and mechanisms that promote improvements in systems for crisis response.
The GRiF will also provide technical assistance to develop, test, scale up, and improve on financial solutions, with specialist support provided by the Centre for Global Disaster Protection in London, a partnership between the UK and the World Bank Group.
“This new Facility will help governments access risk financing and insurance solutions to mobilize effective response and prepare better for climate and disaster shocks”, explained Germany’s Parliamentary State Secretary Norbert Barthle. “It is key that the new facility focus on the poorest and most vulnerable people.”
The World Bank Group noted that natural disasters caused over $300 billion in global losses in 2017, and observed that governments of vulnerable countries generally bear the burden of these costs, with the poorest often exposed to worst immediate and long-term impacts.
“We have all seen the devastating impact of the recent earthquake in Indonesia,” said Penny Mordaunt, Secretary of State for the UK’s Department for International Development. “Disasters are becoming more frequent and more extreme, leading to the loss of life, homes and jobs, particularly among the world’s poorest people.”
“Through the World Bank’s Global Risk Financing Facility, UK aid is supporting countries to build resilience and put in place finance and systems to ensure they are better prepared to respond to emergencies,” she continued. “This will save lives and also help vulnerable countries recover more quickly after disasters.”
The GRiF is currently supported by the German Federal Ministry for Economic Cooperation and Development (BMZ) as well as the UK Department for International Development (DFID), and is jointly managed by the World Bank’s Disaster Risk Financing and Insurance Program (DRFIP) and the Global Facility for Disaster Reduction and Recovery (GFDRR).
The facility will also directly contribute to the goals of the InsuResilience Global Partnership, launched at COP23 in 2017, and will be a member of its Program Alliance.
