Subtheme 2:Local Risk Assessment and

Risk FinancingExecutive Committee Meeting

January 30, 2012

Outline

1. Rationale and Current Issues2. Why is it important?3. Goal and Objectives4. Outcome and Output5. Proposed Background Study/Research6. Proposed Donor Agencies

• Risk identification through risk assessment and risk financing are two of the five pillars of Disaster Risk Management

• Risk assessment at the local level is key to understand risk distributions; to formulate policy, strategy, and plan for mitigation

• Risk financing at the local level is generally underdeveloped.

• Promoting various risk financing options for local communities and governments through risk pooling and transfer becomes very important

Rationale

• Scope and scale of analysis are critical, and these require different data.

• Local risk assessment requires consistent guidelines to ensure comparability

• Need to combine available limited hazard data with field survey

• Data and method must be standardized • Awareness of risk and concrete practical applications are

often more importan• Local universities and industries to support local

government and communities

Current Issueson Local Risk Assessment

• Risk financial impacts to local community and local government are higher because of damage of assets and interuption of economic activities

• Most of the financial risks are retained by the locals with only few cases of systematic risk transfers.

• Long tradition of community reserve in food/agricultural harvest, but not enough to cover disruption of local livelihood and damage to assets

• Expand community reserve through pooling resources with other localities

Current Issues on Risk Financing

• Local risk assessment serves two different groups of users: the community/village level, and district/city or provincial level.

• Development decision making should consider risk mitigation

• The use of risk assessment at the village level is to prioritize community actions, while its use at the district level and above is more for formal planning and zoning regulation.

The Importanceof Risk Assessment

• Risk Financing (RF) is a process to determine the strategy achieving the optimal balance between retaining and transferring risk within an entity.

• Risk pooling and transfer are very important at the local community or government level, because of its small economic scale.

• Diversifying sources of funding and developing credible mechanism are important to achieve sustainable risk financing

The Importance of Risk Financing

• Goal– to help formulate agreed agenda on LRA and LRF

(Declaration, Action Plan, Road Map, Concrete Targets)

• Objectives: to facilitate– Information and experience exchanges– Benchmarking of practices– Documenting success stories and lessons learned

Goal and Objectives of Study

• Outputs– Facts of current conditions, issues of Local Risk

ssessment [LRA] and Local Risk Financing [LRF] in Asia – Documents on experiences, lessons learned, and

potential scaling up in implementing LRA and LRF in selected Asian countries

• Outcomes– Regional agenda to strengthening LRA and LRF in

Asian countries– Increased capacity in conducting/strengthening LRA

and LRF at district level in each country signing up to the agenda

Outputs and Outcomes

• Methods– Are there success stories of cost effective and accurate

local risk assessments• Data– How can data gap for high resolution local risk assessment

be addressed• Human resources/expertise– What is the minimum expertise required

• Application of LRA– How can local government and community use risk

information to influence development decisions to improve their resilience

Proposed Background Studyon Local Risk Assessment

• Local Public financing– Are there any experiences in successfully implementing

local risk financing strategy– What has been the experience in insuring public asset– How successful risk pooling implementation has been at

the local level, and can it be sustainable• Micro Insurance– Is there successful micro insurance product that covers

disaster impacts that can be replicated• Local Public Private Partnership [PPP]– What are the key to success of PPP in co-financing DRM

Proposed Background Studyon Risk Financing

• Risk Assessment Regional Consultant supported by GFDRR/World Bank and AIFDR/AusAID with National Consultant to be provided by BNPB

• Risk Financing Regional Consultant supported by ADB with National Consultant to be provided by BNPB

Potential Supports