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

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It represents the amount that countries would have to set aside each year to cover the cost of future disasters in the absence of insurance or other disaster risk financing mechanisms.
Disaster risk should be understood as a contingent liability (described as “another category of toxic assets” in GAR13). If a country ignores disaster risk and allows risk to accumulate, it is in effect undermining its own future potential for social and economic development. However, if a country invests in disaster risk reduction, over time it can reduce the potential losses it faces, thus freeing up critical resources for development.
Global average annual loss (AAL) in the built environment associated with tropical cyclones (wind and storm surge), earthquakes, tsunamis and floods is now estimated at almost US$314 billion.1 This is the amount of money that should be set aside each year worldwide to cover the future disaster losses associated with these hazards.
If this risk were shared equally amongst the world’s population, it would be equivalent to an annual loss of almost US$70 for each individual person of working age,2 or two months’ income for people living below the poverty line.3 This represents an existential risk for people already struggling for survival on a daily basis.
For higher-income groups, these losses are not existential, yet they can be compared with other ways in which household disposable income can be lost. For example, in the United States of America, electricity prices were increased by US$0.24 per kilowatt-hour in 2011, meaning that monthly household bills increased by an average of US$24 per year.4 If the risk were shared out equally among the world’s population, and assuming an average household size of 3 people,5 each household should be setting aside US$210 a year to cover potential disaster losses—around nine times the reduction of household disposable income from rising electricity costs.
At a macroeconomic level, global AAL is almost equivalent to the entire GDP of high-income economies such as New Zealand or Kuwait, or ten times the gross national income of Niger.6 It is also significantly higher than the cost of non-conflict armed violence,7 which is currently estimated at US$95 billion to US$163 billion (Geneva Declaration, no date

Geneva Declaration. no date,Chapter 5: What’s in a Number? Estimating the Economic Costs of Armed Violence, Geneva. .
). Global AAL also corresponds to more than the estimated total cost of armed conflict on the African continent since 1990 (IANSA et al., 2007

IANSA (International Action Network on Small Arms), Oxfam International and Safer World. 2007,Africa’s missing billions: International arms flows and the cost of conflict, Briefing Pa-per 107.. .
) and almost 40 times the value of international investments to fight HIV/AIDS in 2013 (UNAIDS, 2014

UNAIDS. 2014,Financing the Response to HIV in Low- and Middle-Income Countries: International Assistance from Donor Governments in 2013, July 2014. Prepared by Jennifer Kates & Adam Wexler (Kaiser Family Foundation) and Eric Lief (Consultant).. .
). It is significantly higher than the total investment in water and sanitation in either China or India. Even more critically, it is almost equivalent to the estimated annual global financing that will be required in areas such as transport infrastructure or education in order to meet the Sustainable Development Goals (SDGs) (UNCTAD, 2014

UNCTAD (United Nations Conference on Trade and Development). 2014,World Investment Report 2014 - Investing in the SDG’s: An Action Plan, Printed in Switzerland.. .
). Unless addressed, the contingent liability represented by disaster risk will therefore threaten the achievement of the SDGs.
The AAL has been calculated as part of the new Global Risk Assessment, the first of its kind to provide worldwide coverage for multiple hazards. While an increasing number of risk assessments are now being produced for specific hazards and portfolios of exposed assets, up to now it has been difficult to estimate global disaster risk due to major geographical gaps and the fact that global assessments for single hazards use different data sets and methodology.8 By using the same methodology, arithmetic and exposure model to calculate the risk for all hazards, the new global assessment (Box 3.1) enables comparisons of risk levels between countries and regions and across hazard types. In this way, it enables a better mapping and understanding of the global risk landscape, an estimation of the order of magnitude of losses in each country, and a calculation of the risk contributions from different hazards.
The global AAL data illustrates how disaster risk is distributed across countries, income groups,
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