Behavior change in the face of disaster risk finance
This publication investigates how Disaster Risk Finance (DRF) can affect personal risk perception and provoke behavior changes. With the increasing frequency of humanitarian disasters, countries have had to evaluate how they respond to humanitarian crises (Financial Protection Forum 2017). These crises can incur massive economic losses, significantly set back recovery from previous disasters, and reduce the resilience of the countries, regions, and communities that are affected. DRF is a promising approach to proactively reduce the risk involved in humanitarian disasters (OECD 2015). DRF mobilizes financial resources to ensure affected populations are financially protected from the impacts of a disaster. Disaster reserve funds, insurance, catastrophe bonds, and contingent credit arrangements are some common and effective DRF schemes that governments have employed Financial Protection Forum 2020.
This publication finds that trust in public institutions, ideally the ones that manage DRF, alongside accurate and timely information from government or other relevant actors, is needed for acceptable levels of risk to be communicated and for appropriate corresponding actions to be taken. Large-scale DRF mechanisms are relatively new tools in the field of humanitarian assistance and anticipatory action that can have significant positive effects on disaster recovery. However, there is a lack of analysis on how DRF can affect behavior or risk perception. Drawing on findings from similar programs, such as community health and microfinance, can provide insights on areas where DRF may have impact. The available research indicates that disasters make people risk averse and that insurance and other DRF mechanisms can enable beneficial outcomes.