Global Assessment Report on Disaster Risk Reduction 2015
Making development sustainable: The future of disaster risk management

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xviii Preface
in sectors and territories to ensure a low discounting of future risk as well as transparency and accountability as risks are generated, transferred and retained.
This requires a combination of prospective risk management to ensure that risks are appropriately managed in new investment, corrective risk management to reduce the risk present in existing capital stock, and compensatory risk management to strengthen resilience at all levels.
From risk information to risk knowledge
Managing risks in this way requires greater risk awareness and knowledge. The social production of risk information itself needs to be transformed, with a shift in focus from the production of risk information per se towards information that is understandable and actionable by different kinds of users: in other words, risk knowledge.
A change in perspective in the production of risk information is also required: from measuring risk as an objective externality that can be reduced towards understanding risk as both an opportunity and a threat, and towards improved identification and estimation of the causes and consequences of risk generation and accumulation.
An increasing sensitivity to extensive risk is particularly important. Because of its pervasiveness, this form of risk relates directly to the day-to-day concerns of households, communities, small businesses and local governments, and therefore it can stimulate and leverage social demand for disaster risk reduction. At the same time, precisely because it is a risk layer that internalizes social, economic and environmental vulnerability, it can be managed effectively through an appropriate combination of prospective, corrective and compensatory disaster risk management practices.
Assessing the costs and benefits
Disaster risk management always weighs risk against opportunity and future threats against
current needs. As such, the costs and benefits of disaster risk management need to become fully encoded into public and private investment at all levels, into the financial system and into the design of risk-sharing and social protection mechanisms.
At present, cost-benefit analyses are usually limited to the avoided replacement costs of damaged buildings or infrastructure versus the additional costs of reducing the relevant risks. This analysis needs to be expanded to highlight the trade-offs implicit in each decision, including the downstream benefits and avoided costs in terms of reduced poverty and inequality, environmental sustainability, economic development and social progress as well as a clear identification of who retains the risks, who bears the costs and who reaps the benefits.
Such a broader approach to cost-benefit analysis can increase the visibility and attractiveness of investments in disaster risk management by stressing their positive development benefits rather than the avoided costs and losses alone. If encoded into the financial system, it can help to identify the potential risks inherent in asset and loan portfolios, in credit and debt ratings and in forecasts and analyses, thus defusing the dangerous link between global financial flows and investments that increase disaster risk.
This approach may also provide a rationale to encourage the expansion of risk financing and social protection measures to low-income households, small businesses and local governments.
Becoming accountable
It will only be possible to encode the full costs and benefits of disaster risk management into investment decisions, the financial sector and risk-sharing mechanisms if those responsible can be held to account for their decisions. If societies become more sensitive to both the causes and consequences of disaster risk, responsibility for
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