By David Singh
GENEVA, 13 November 2012
- UNISDR Chief, Margareta Wahlström, has welcomed the recognition by the G20 group of countries that disaster risk financing is crucial for good disaster risk management.
"The accumulation of disaster risks and losses are hurting the economies of rich as well as poor countries. It's urgent and critical for sustainability to make mitigation and risk reduction politically significant activities", she said.
During high level discussions last week in Mexico City on global economic and financial challenges, G20 Finance Ministers and Central Bank Governors issued a communiqué in which they recognized that "disaster risk financing policies are necessary for an overall disaster risk management (DRM) strategy.
"We appreciate and welcome the combined efforts made by the World Bank and the OECD [Organization for Economic Co-operation and Development], with the support of the United Nations, to broaden the participation in the discussion on DRM by highlighting the central role that financial policymakers play to support other areas of Government and civil society in dealing with disasters."
The communiqué "welcomed the G20/OECD voluntary framework for disaster risk assessment and risk financing which provides a detailed guideline to facilitate implementation of more effective DRM strategies.
"The Disaster Risk Assessment and Risk Financing - G20/OECD Methodological Framework has been developed as a response to a mandate from G20 leaders, finance ministers and central bank governors to foster more effective disaster risk management approaches with a particular focus on financial strategies."
In his opening remarks on 4 November at the joint G20 Press Conference on Disaster Risk Reduction, with Mexico's Finance Minister Jose Antonio Meade, and OECD Secretary-General José Angel Gurria, World Bank Group President, Dr. Jim Yong Kim, said the Bank was working with many countries to help further risk financing strategies suitable to their needs.
Referring to the recent disaster in the United States and the Caribbean, the World Bank President, Dr. Jim Yong Kim said Hurricane Sandy was a powerful reminder that no country is immune from natural hazards. "We must strengthen countries' capacities to respond to disasters and ensure that the financial mechanisms are in place to finance response and recovery while protecting budgets.
"Years of development efforts are wiped out in days or even minutes ... the decisions we make today will determine our long-term resilience to natural hazards and be critical to people's well-being in the short- and long-term," said Dr. Kim.
According to the G20/OECD Framework, financial management strategies involve key decisions on the development and design of schemes enabling post-disaster assistance and disaster insurance as well as the provision of financial guarantees within these schemes, the management of disaster-related contingent liabilities within the fiscal framework, and the role of the financial sector.
These decisions become increasingly critical insofar as a country's disaster risks are significant and insurance markets are absent or unable to cover these risks, leaving the government with potentially large financial exposures.
The work of the G20/OECD Framework will be enhanced by other similar mechanisms. These include the work by the Asia-Pacific Economic Cooperation (APEC) on addressing fiscal risk to disasters which was initiated by the Russian Ministry of Finance and the World Bank; the emerging work of the IMF on disaster risk management; two new credit lines for $8 billion by the Inter-American Development Bank (IADB) to help countries cope with external financial crises and natural disasters; work by the Asian Development Bank (ADB) on disaster risk reduction in public investment portfolios and; work by OECD's Development Assistance Committee on risk and resilience, which seeks to provide guidance to the donor community in managing risk in their aid investments.
As of 2012, there are 20 members of the G-20. These include, at the leaders summits, the leaders of 19 countries and of the European Union, and, at the ministerial-level meetings, the finance ministers and central bank governors of 19 countries and of the European Union. The Group is comprised of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, United States of America, and the European Union.