Central Asian countries will benefit from a better understanding of their natural disaster risks, which in time could lead to greater use of risk transfer, insurance and reinsurance capacity in the region, as the World Bank supports a multi-peril risk assessment project for the region.
One of the first steps in moving towards sovereign disaster risk transfer, such as use of insurance, reinsurance or catastrophe bond type arrangements, tends to be in the development of risk modelling tools to enhance the understanding of exposures in a country.
To that end, the World Bank, alongside its partners, has launched an initiative to provide a multi-peril risk assessment of natural disaster risks, including earthquakes, floods and selected landslides within the Central Asia region.
The objective here is to strengthen Central Asian countries’ resilience to natural disasters and climate risks, through enhanced financial resilience, capacity to identify risks, and improved disaster risk management.
“This is a much-awaited multi-peril risk assessment of natural disasters in Central Asia,” explained Almabek Aidakeev, National Coordinator for Sendai Framework Program from the Kyrgyz Republic. “The results of the assessment will equip us with required data to better prepare ourselves and our communities for natural disasters.”
This multi-peril risk assessment initiative will adopt a consistent approach across hazards and asset types, which the World Bank says is the first such attempt in the Central Asia region.
Through provision of common disaster risk analytics and metrics , the aim is to enable coherent and consistent strategic financial solution strategies to be created, across geographical areas and economic sectors.
The goal is to provide a better understanding of how natural disaster risk affects the population, buildings and, in general, the economies of all five Central Asian countries, while local governments will gain access to a tool to help inform their disaster risk management strategies.
“Deepening the understanding of disaster risks through its quantification and assessment will play a crucial role for governments in Central Asia and inform their interventions and strengthen their preparedness for natural disasters,” commented Johannes Stenbaek Madsen, Head of Cooperation at the Delegation of the European Union to the Republic of Kazakhstan.
There has been a focus on the disaster risk transfer and insurance needs of similar countries before, when the United Nations Development Programme (UNDP) looked at catastrophe bonds as part of a disaster risk transfer solution for use in the Europe and Commonwealth of Independent States (ECIS) region.
These countries share a lot of similarities with the five Central Asia countries, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, in terms of disaster perils faced and the need to ensure governments are prepared financially for them.
The World Bank’s support should assist these countries as they build on their understanding of the disaster risks faced, to enhance their resilience and potentially move down a path towards disaster risk financing, using insurance or reinsurance structures and even the capital markets.