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Seminar on Strengthening Cooperation with the Candidate Countries and Western Balkan Countries in the Field of Civil Protection

South Eastern EuropeDisaster Risk Reduction and Adaptation Initiative

Paola Albrito UN/ISDR Secretariat - Regional Coordinator Europe and Eugene N. Gurenko, Ph.D., CPCU, ARe Lead Insurance Specialist

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Number of years taken for average

Country

GDP PPP per capita [$/inh.] 2005

Annual average economic loss due to all perils (million USD)

% to GDP

Economic loss (in million USD)

Drought EQ FloodTropical cyclone

1974-2006

Albania 2755.3 68.67 2.49 2238 2 to 5 24.673 0

1989-2006

Bosnia and Herzegovina

2384.0 22.94 0.96 408 > 5* 0 0

1974-2006

Bulgaria 4733.9 14.76 0.31 0 5* 260.23 0

1989-2006

Croatia 6376.2 33.76 0.53 330 > 5* 0 0

1989-2006

Macedonia 4467.7 24.59 0.55 0 5* 353.6 0

1984-2006

Moldova 2876.1 61.40 2.13 0 0 152.584 31.6

1974-2006

Romania 5954.9 292.76 4.92 500 2756* 3269.3 0

1989-2006

Serbia and Montenegro

4936.0 82.0 1.66 2705 0 0

1984-2006

Slovenia 13611.4 7.31 0.05 0 10 5 0

1974-2006

Turkey 4680.8 560.56 11.98 0 15988 2511 0

The costs of disasters

Economic loss in comparison to GDP in SEE countries

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Recurrence of flood events in Europe, 1998-2005

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0

100

200

300

400

500

600M

ultip

le

Economic Loss from Cat Event/Total Emergency Funds

SEE governments are fiscally unprepared to deal with catastrophic losses

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Global Trends - Disasters are NOT naturalNatural and human-induced hazardsNatural and human-induced hazardsClimate change and variablesClimate change and variables(global warming and “global dimming”)(global warming and “global dimming”)

Socio-economic: poverty,Socio-economic: poverty, unplanned urban growth, lack of unplanned urban growth, lack of

awareness and institutional awareness and institutional capacities...capacities...

Physical: insufficient land use planning, Physical: insufficient land use planning, housing, infrastructures located in housing, infrastructures located in hazard prone areas...hazard prone areas...

Environmental degradation Environmental degradation ecosystem degradation; coastal, ecosystem degradation; coastal,

watershed, marshlands…), etc.watershed, marshlands…), etc.

HAZARDS +HAZARDS +

EXTREME EVENTSEXTREME EVENTS

VULNERABILITYVULNERABILITY

Natural hazard VulnerabilityX = Disaster Risk

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WHY A NATIONAL PLATFORM? Disaster risk reduction is an issue of great

complexity that requires close cooperation among stakeholders representing comprehensive skills and knowledge needed for disaster risk reduction and its mainstreaming into development planning and practice.

Therefore Need of: A nationally-owned coordination mechanism (adopting

the form of a forum or committee)

A participatory process (different sectors’ perspectives and actions, and a multistakeholder composition

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UN RESOLUTION ON NATIONAL PLATFORMSIn 1999, the UN Economic and Social Council, Resolution 1999/63,

“called on all Governments to maintain and strengthen established national and multi-sectoral platforms for natural disaster reduction in order to achieve sustainable development goals and objectives, with the full utilization of scientific and technical means.”

In 2005, the UN General Assembly, resolution A/RES/59/231:“ called upon Governments to establish national platforms or focal points for disaster reduction, encourages government to strengthen platforms where they have already exist, urges United Nations system to provide appropriate support to those mechanisms…” UN RESOLUTION ON NATIONAL PLATFORMS

In 2005, the Hyogo Framework for Action 2005-2015: Building the Resilience of Nations and Communities to Disasters One of the Framework strategic goals is the “Development and strengthening of institutions, mechanisms and capacities to build resilience to hazards”. It calls all nations to “Support the creation and strengthening of national integrated mechanisms, such as multisectoral national platforms” to ensure that disaster risk reduction is a national and a local priority.

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Key Areas of the InitiativeKey Areas of the Initiative::

Hydrological and meteorological forecasting, data sharing and early Hydrological and meteorological forecasting, data sharing and early warning systemwarning system

Strengthening regional capacities in disaster risk reduction and Strengthening regional capacities in disaster risk reduction and responseresponse

Financing of disaster losses and risk transfer mechanismFinancing of disaster losses and risk transfer mechanism

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Partnership

WB-UN/ISDR secretariat in partnership with main UN agencies and actors WB-UN/ISDR secretariat in partnership with main UN agencies and actors based on the priority areas:based on the priority areas:

• UN Agencies part of the ISDR system: WMO (Strong partner for the UN Agencies part of the ISDR system: WMO (Strong partner for the Hydromet Component), UNICEF, UNDP etc..Hydromet Component), UNICEF, UNDP etc..

• Regional Organizations: Council of Europe, the EU, DPPI, OECD etc..Regional Organizations: Council of Europe, the EU, DPPI, OECD etc..

• Bi-lateral/Multilateral donors: Denmark, Finland, Switzerland, Italy etc.. (if Bi-lateral/Multilateral donors: Denmark, Finland, Switzerland, Italy etc.. (if interest shown by the SEE countries and by donor)interest shown by the SEE countries and by donor)

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Hydrological and Meteorological Forecasting, Data Sharing and Early Warning System

• Initiative has been agreed during the ICEED meeting in Dubrovnik in May 2006

• Strong partnership with WMO

• Objective of this initiative is to promote a coordinated approach and data sharing in Hydromet services in South Eastern Europe

• Feasibility assessment has been completed and was discussed in a regional meeting on October 24-25, 2007 in Zagreb

• Coverage: Moldova, Romania, Bulgaria, Serbia, Montenegro, Croatia, Albania, Macedonia, Bosnia & Herzegovina

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Flood Forecasting and Early Warning System on Sava River

• Initiative was agreed during Podgorica meeting of the Directors of Hydromet services in Sava river countries in April 2007.

• Objectives is to build capacity and to re-establish data sharing and collaboration on flood forecasting and early warning system on the Sava river.

• Feasibility Assessment has been completed and discussed in

a regional meeting in Zagreb on October 24-25, 2007.

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Disaster Risk Reduction and Response

• Objectives is to promote and implement investment priorities for strengthening the capacity and promote a coordinated approach to disaster preparedness and response

• Will be built on existing agreements: Civil-Military Emergency Planning Council and the Disaster Preparedness Initiative of the Stability Pact

• Vulnerability Assessment Desk Review is completed

• More detailed assessment of disaster response is needed. Currently working on Civil Protection review.

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Risk transfer component

Creation of a regional catastrophe insurance pool that would offer affordably-priced catastrophe insurance coverage to homeowners and SMEs in SEE countries.

Development of standardized tradable weather risk hedging instruments to protect businesses against loss of revenue due to adverse weather conditions.

Contingent loan facilities for natural disasters – “A Cat DDO”

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Schematic allocation of sovereign catastrophe risk by sources of risk financing and available World Bank instruments

Risk retention

Risk financing

Reinsurance

Catastrophe bonds

Donor aid

20 year event or up to 3% of fiscal revenue

30 year event or up to 5% of fiscal revenue

30-100 year event or in excess of 5% of fiscal revenue

100-200 year event or in excess of 5% of fiscal revenue

200+ year event or in excess of 5% of fiscal revenue

Available World Bank instruments

Disaster Draw-Down Option loans

Catastrophe risk insurance pools

Catastrophe bonds for sovereigns

Emergency reconstruction loans

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Deferred Draw-Down Option Loan for Natural Disasters (DDO)

• Will provide immediate liquidity to fill the budget gap in the aftermath of natural disasters.

• Disburses under pre-defined conditions such as declaration of national emergency by government.

• Certainty of disbursement

• Highly affordable pricing.

• Prerequisites:• Sustainable debt level• Satisfactory macroeconomic framework• Satisfactory emergency budget appropriation legislation/system in place• Completion of a risk assessment program and preparation of a hazard risk

mitigation strategy• Could be used to support gov’t recovery programs or gov’t backed insurance

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1.1.

2.2.

3.3.

Proposed South Eastern Europe Regional Catastrophe Insurance Facility

SEESEEcountriescountries

SERSERCIFCIF

IBRD

Special Purpose Vehicle Investors

Reinsurers

Advisory support

ContingentCredit Facility

Protection

Spread

Libor+Spread

Bond principal

Sum Insured

1

2

3

IBRD provides advisory support to SEERCIF member countries in structuring and launching the facility.SEE households buy a SEERCIF insurance policy by paying an annual premium for its cover. The facility retains a part of risk relying on IBRD contingent capital to pay small claims. In the absence of claims it accumulates reserves.The facility transfers most of risk to reinsurance and capital markets either through a reinsurance contract or by issuing a cat bond.

Premium

Protection

PremiumSEESEEHomeHome

ownersowners

Catastrophe insurance coverage against the risks of flood and quake for homeowners and SMEs

Risk transfer solutions for homeowners and SMEs

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Hedging weather exposure of businesses to weather in SEE

Sellers of weather risk protectionBuyers of weather risk protection

Electronic portal

Weather reference indices

(temperature, precipitation, wind)

Risk management advisor to SMEs

SEE metservices

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Next steps

Establish the insurance facility in one of the EU countries

Obtain expressions of interest for participation in the program from SEE client countries.

Prepare individual country projects.

Commence program implementation.

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Thank you