World Bank Group, Germany, and UK launch $145 million facility to support earlier action on climate and disaster shocks

GRiF will scale up and strengthen existing risk financing initiatives as well as act as catalyst to pilot approaches not yet explored by other programs. This includes scaling-up existing and piloting new risk pooling mechanisms; testing insurance premium financing for the poorest countries; and new types of contingent financing to complement insurance, including contingent investment loans. It would also explore new financial structures, for example linking risk financing directly to scalable safety net systems, disaster preparedness plans, or to financing for resilient infrastructure. The scope of GRiF will initially cover climate and disaster shocks, and over time, will be broadened to other crises pending interest from partners.

Activities to be financed by GRiF include:

1. insurance premium financing, e.g., for the payment of risk transfer instruments;
2. contingent financing, e.g., through the provision of concessional credits to complement risk transfer solutions;
3. risk financing investments, e.g., investment in start-up or operating costs and capital for risk pools;
4. integrating risk transfer with loans to pilot new approaches to support debt sustainability in the face of extreme events;
5. risk financing mechanisms that promote parallel improvements in country systems for crisis response and recovery;
6. technical assistance and capacity building where this is not yet covered by other programs.

GRiF will be implemented by the World Bank and select implementing partners. GRiF funding will be channeled through the World Bank or select implementing partners such as regional development banks.

The ultimate recipients of the GRiF funds are either (i) countries with adequate capacity and government systems in place; or (ii) humanitarian and development partners where appropriate to the context. GRiF works mainly with governments to implement risk financing strategies as part of core development planning and fiscal risk management, linking crisis response funding to contingency plans within national systems.

In cases where government systems for emergency response are insufficiently developed, overstretched, or under stress from other challenges (e.g., in conflict situations), response funding may be provided to external implementing agencies (such as WFP, FAO, and other UN agencies) or non-governmental partners with a view to strengthening structural and systematic response.

Projects will be selected and evaluated through a transparent process.External expertise will feed into the World Bank’s internal evaluation of funding proposal. Independent impact evaluations will be included in the program design of GRiF.

Who are GRiF’s development partners?

Civil society organizations are key stakeholders in the design and implementation of GRiF activities. The GRiF aims to build on participatory approaches in the preparation of all investments and appropriately incorporate dimensions of gender, disability, age, and other social vulnerabilities while designing financial instrument. GRiF will seek to work with and support operational civil society organizations (CSO). This work is already ongoing through collaboration with the Start Network. More CSOs involvement in risk finance and insurance could follow suit.

Strong collaboration with the private sector is key to achieve the objectives of GRiF, aligned with the World Bank’s “Maximizing Finance for Development” principles. GRiF aims to apply these principles to harness sustainable private sector solutions for risk financing. This includes building on the ongoing technical collaboration with the Insurance Development Forum (IDF). GRiF seeks to crowd in sustainable private sector solutions.

Regional catastrophe risk pools are important partners of GRiF. Regional catastrophe risk pools in Africa (ARC), the Caribbean (CCRIF), and the Pacific (PCRAFI) have established themselves as key vehicles for countries to strengthen their financial resilience, with a facility for Southeast Asia (SEADRIF) under development. The GRiF will duly consider these entities while implementing activities. Such consideration will take into account financial analysis and potential larger development objectives including regional ownership and public goods.