Bringing risk knowledge and tools where they are needed the most
Co-authored by Tuga Alaskary
When making economic decisions, planning new infrastructure or developing business plans, climate and disaster risks can have a negative impact on all values created. To safeguard investments, risk management must rest on a comprehensive understanding of risk, drawing on risk data and risk modeling.
Risk models quantify risk through simulation of the magnitude, intensity, frequency and location of many possible events to determine the probable amount of damage, harm or financial loss. Output metrics are combined with judgment to make decisions which can protect individuals, businesses and communities.
At the InsuResilience Global Partnership, the question of risk is always at the forefront of our minds. For 40 years catastrophe risk modelling has been widely used to inform decisions on large-scale risk transfer. The insurance sector has made quantitative risk understanding a survival skill. Today its inputs and methodologies are equally applicable to prioritising public investment in risk prevention. They are increasingly adapted for application in humanitarian finance. More and more, development agencies and sovereigns are engaging with us to advance a shared understanding of risk.
Disconnect between technology and decision makers
Unfortunately, this powerful approach is not yet available to all. The recent ‘Development Impact of Risk Analytics’ paper from the Insurance Development Forum highlights this paradox: so much of the science and resources in risk modelling is in the global north, while the risk decision-makers with the greatest need for it are in the global south.
A more inclusive and collaborative approach to disaster risk modelling would support better decision making – one of the seven recommendations provided by this paper. Open platforms and interoperable data standards are a key enabler to cross-sector collaboration and empowerment of local decision-makers.
The good news is that the components to make this possible already exist – despite the many gaps we would all like to fill, there are more data than ever, and open-source risk platforms are available for localized model development. Apart from the significant challenge of building a national structured and strategic multi-sectoral approach to risk, the biggest problem is one of distribution.
Open source platforms and shared data standards
The paper recommends that sovereign risk functions adopt open-source risk platforms, and that data and model providers should rapidly adopt the shared open data standards and interoperable formats already in development.
The outcome of this could be powerful. Risk owners would be able to develop their own view of risk, though integration of local research with global data. They would be able to judge the relative importance of assumptions underlying the models, and they would have access to a choice of model sources. The better we can understand risks and their impacts, the more we are able to provide cost-effective measures to reduce human suffering and economic damage.
Leaving no one behind
The InsuResilience Global Partnership Vision 2025 identifies growth in risk understanding through the adoption of open-source risk platforms and open modelling practices as integral to achieving its vision of strengthening the resilience of poor and vulnerable people against the impacts of climate and disaster risks. As the paper highlights, improving risk analytics is crucial for the delivery of the 17 UN Sustainable Development Goals (SDGs).
In this context, the disaggregation of data is critical to reflect the distinct experience of women and girls in disasters and inform the integration of gender considerations in the process of understanding and managing risk.
Awareness of the value of risk science has never been so high in public consciousness, whether for pandemic, climate risk or a combination of risks. Now is the time to share the knowledge and make the tools available where they are needed the most.
InsuResilience Global Partnership: Built on the recognition of the need for coordinated, targeted and joint efforts to address climate and disaster risks, the InsuResilience Global Partnership was officially launched at the United Nations (UN) Climate Conference, COP23, in November 2017. Since then, a grand coalition of governments, multilateral development organisations, the private sector, civil society, and academia have worked hand in hand to strengthen disaster risk management through the promotion of financing mechanisms which are designed to enable faster, more reliable and cost-effective responses to disasters.
Insurance Development Forum: The Insurance Development Forum (IDF) is a public-private partnership led by the insurance industry and supported by international organisations, including the United Nations and the World Bank. It was established to facilitate and support the growth and development of insurance-related resources and capabilities to help achieve the objectives of the Sustainable Development Goals (SDGs) and related United Nations (UN) Agreements under the U.N. Global 2030 Agenda.
Tuga Alaskary is an Advisor at the Secretariat of the InsuResilience Global Partnership. Prior to this, she worked for the World Food Programme, Asian Development Bank, and African Risk Capacity, where she was engaged in the design and deployment of disaster risk financing and insurance initiatives across Africa and Asia. A British and Iraqi national, Tuga has a B.A. honors degree in Politics, Philosophy and Economics from the University of Essex and an MSc in Development Studies from the University of London's School of Oriental and African Studies.
Dr. Astrid Zwick is Head of the InsuResilience Secretariat supporting the V20-G20 led InsuResilience Global Partnership in its goal to foster climate and disaster risk finance and insurance. From 2010 to 2016 as Head of Department “Corporate Responsibility” of Munich Re Group and from 2000 to 2010 as Sustainability Officer of Allianz Group she set up and implemented the Corporate Responsibility Strategies of the two large international companies. Among several other tasks, she also chaired the International Working Group of the UN Environment Finance Initiative’s Principles for Sustainable Insurance. Prior to this she was working with the European Commission’s Institute for Technological Prospective Studies in charge of policy advice on climate change to the Commission Services and among others to WHO. Astrid holds a PhD in the science of climate change.