s3 asean drfi forum finriskprofiles&impacts nov3

8/3/2019 S3 ASEAN DRFI Forum FinRiskProfiles&Impacts Nov3

1/18

ASEANDISASTERRISKFINANCING

&INSURANCEFORUM

ASEANDISASTERRISKFINANCING&INSURANCEFORUMSession3

Assessment

of

Economic

&

Fiscal

Impacts

and

OlivierMahul

e r anagemen

ProgramCoordinator,

Disaster

Risk

Financing

&

Insurance,

The

World

Bank

November8 10,2011

Jakarta,Indonesia


2/18


&INSURANCEFORUM

Disclaimer

Thisreport

is

awork

in

progress

presented

for

further

collaborativedrafting.Theteamhasmadeeveryattemptto

,

interpretedwithdueconsiderationtoitslimitationsresulting

fromthe

fact

that

indirect

sources

have

been

used

where

primarysourceswerenotavai a e,an t att eco ective

knowledgeinthisareaislimited.

discussionwiththeASEANMemberStatesandotherparticipantsduringthisForum.


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Presentationbackground&structure

or an an ecretar at ac groun report

on

the

state

of

disaster

risk

financing

and

PreliminaryfindingsfromFirstDraftreport;

Vulnerabilitytonaturaldisasters;

Pro ress in disaster risk mana ement

Economiclossesfromnaturaldisasters;

Fiscalvulnerabilitytonaturaldisasters;

Fiscalriskmanagementofnaturaldisasters.


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&INSURANCEFORUM

ASEANregionhighlyexposedtoalmostalltypesof

naturalhazards

Historyof

devastating

disasters

Economicandfiscalvulnerabilit

ASEAN Mortality Risk Index for Multi

Hazard Risk

tonaturaldisastersisincreasing

unprecedentedurbanization

and

rapideconomicgrowth,

Climatechange

Largepopulation

living

in

areas

at

highriskofperiodicfloodingSource:ASEANDRMI2010


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Stormsandfloodsarethemostprevalenthazardsand

causethemostcasualties

os vu nera eareas: e ong ver e areg on, e nam; reg ons, pp nes;

Almostallregions,Cambodia;NorthandEastLaoPDR;Bangkokregion,Thailand;West

andsouth

of

Sumatra,

and

western

and

eastern

Java,

Indonesia.


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Significantvariationwithinregiononimplementationof

disasterriskmanagement(DRM)strategies

HyogoFrameworkforAction(HFA)implementationprogresshighlyvariable

HFAcomplianceImplementationprogress:2=some progress withoutsystematicpolicyand/orinstitutional commitment

.

HFAPriority#1:Ensurethatdisaster

risk

reduction

is

a

national

and

a

local

prioritywithastronginstitutional

HFAPriority#1 HFAPriority#2 HFAPriority#3 HFAPriority#4 HFAPriority#5BruneiDarussalam 3 3 2 2 3

3=institutional commitmentattained bu tachievementsare neithercomprehensive no r4=substantialachievedattainedbu twithrecognized limitationsi ncapacities a nd

as s or mp emen a on

HFAPriority#2:Identify,assessand

monitordisasterrisksandenhance

earlywarning

HFAPriority#3:Useknowledge,

innovation and education to build a

LaoPDR 2 4 3 3 3Malaysia 4 4 4 4 4

Myanmar 3 2 2 2 2

Philippines 4 4 3 3 4

cultureof

safety

and

resilience

at

all

levels

HFAPriority#4:Reducethe

underlyingriskfactors

HFAPriority#5:Strengthendisaster

Thailand 4 3 4 3 4

Vietnam 4 3 3 3 4

preparednessforeffectiveresponseat

alllevels

Note:CambodiaandSingaporenotincludedinthisreview.


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ChallengestomainstreamingDRMinASEANcountries

remain

Limitedinstitutionalization

of

DRM

as

apriority

at

the

national

andsubnationallevels

Developmentanduseofriskassessmenttoolsand

methodologies

to

support

disaster

risk

reduction

(DRR)

Crosssectorandcrossjurisdictionalcoordinationrequire

strengthening

Difficultyto

sustain

awareness

on

low

frequency

disaster

risk

andtoexpandpublicknowledgebeyondhighriskareasthat


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MethodologyforassessingdisasterlossesinASEAN

Combinationof

historical

and

simulated

disaster

economiclosses

HistoricaldatafromEMDATCRED

Highfrequency

low

impact

disasters

Localizeddroughtsandfloods,smallstorms

Probabilisticcatastropheriskmodels

Largeearthquakesand/orstorms

SimulatedlossdataprovidedbyWillisResearchNetwork


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Eachyear,onaverage,ASEANregionexperiences

annualexpectedlossescausedbynaturaldisasters

estimatedat

US$

4.6

billion,

or

0.26%

of

regional

GDP

1,800

8001,000

1,200

1,400

1,600

$Millions 5%

32%

Drought

Flood

Forestfire

0

200

400

600U 0%

0%

1%

0%10%

Massmovement

dryMassmovement

wetVolcano

Wildfire

30% Earthquakes

Storms


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AspercentageofnationalGDP,Myanmar,Philippines,

Vietnam,LaoPDR,andCambodiamostaffectedby

annualexpectedlosses

1.83%2.0

1.2

1.4

1.6

1.8

0.80%0.76%

0.70%0.65%

0.6

0.8

1.0

%ofGDP

0.26%0.18%

0.08% 0.07%0.00% 0.00%

0.0

0.2

0.4


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Onceevery100years,onaverage,theASEANregionisestimated

tofaceannualdisasterlossesinexcessofUS$19billion

25 000

100yearand200yearprobablemaximumlossinUS$Millions 100yearand200yearprobablemaximumloss,as%ofnationalGDP

10,000

15,000

20,000

$Millions

PML(100yrs)

PML(200yrs)

11.7

7.3

4.76.08.0

10.0

12.0

.

ofGDP

PML(100yrs)

PML(200yrs)

0

5,000

U 3.6

1.4 1.1 1.0 0.70.0

0.0

2.0

4.0

Note:Myanmarexcludedduetodatalimitations. As percentageofnationalGDP,robablemaximumlossvaries

significantlyacrosscountries


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ASEANRegioncanbenefitfromregionalrisk

diversification

IndicativeCountryRiskProfiles Estimatedbenefitsofrisk

14%

16%

18%

Cambodia

50,000

60,000

llions

)

Reductionin

6%

8%

10%

%ofGDP

Indonesia

LaoPDR

Malaysia

Philippines

Singapore 20,000

30,000

,

earPMLs(USDmi

PML=56%

0%

2%

4%

0 50 100 150 200 250 300 350 400 450 500

Thailand

Vietnam

10,000

Sumofindividualcountry 200yearPMLforpoolof

200

ReturnPeriod(Years) 200yearPMLs countries


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Governmentsonlyassumefinancialresponsibilityfor

Governmentcontingent

liability

determined

by:

Moralandsocialduties;

qu yconcerns;

Rolesasproviderofpublicgoodsandstimulatorsofeconomicgrowth.

In

practice,

government

contingent

liability

is

difficult

to

assess

ac o c ar yono c a ormsan eve so pos sas ergovernmensupportandadhocdecisionmakingmakeitextremelydifficulttocalculatepubliccontingentliabilityfromanexanteperspective,basedonexpectedgovernmentbehavior.

Contingentliabilitycanbeapproximatedbyapplyingobservedratiosof

dama etoidentified ublicsectorrecover andreconstructions endin

requirementsfollowingrecentdisasterstoaverageexpectedeconomicloss

andprobable

maximum

loss

data.


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Annualexpectedfiscalburdenofdisastersisestimated

toexceed0.5%oftotal overnmentex endituresinfive

ASEANCountries


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Probablefiscalburdenrelativetoannualgovernment

particularlyhigh

in

Lao

PDR,

Philippines,

and

Cambodia


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&INSURANCEFORUM

ASEANCountriescurrentlyretainmostoftheir

sovereigndisasterrisk

Relativelylittle

public

use

of

risk

transfer

instruments

Heav relianceonannualdisasterbud etallocationsandde

factopostdisasterreallocations

Verylimited

use

of

tax

instruments

to

raise

disaster

response

nanc ng, u axcu s os mu a eeconom crecoveryare

common

SomeASEANstateshavesecuredexantecontin entcreditfor

disasterresponse

purposes,

facilitating

rapid

access

to

liquidity

postdisaster

o countr es avesetup e cate mu t yearreserve

funds

to

finance

the

cost

of

natural

disasters


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Preliminarysummaryoffiscalriskmanagement

arran ements in ASEAN Countries


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ASEANCountriesdonotseemshaveadequate

financingarrangementsinplacetomanageamajor

disasterevent

Availableevidencesuggeststhathumanitarianreliefneedsare

,

secureadequate,timelyfundingforearlyrecoveryand,in

particular,reconstruction

Disbursementofavailablefundingcanberelativelyslow

Fundinggapsmaybefeltparticularlyacutelyatalocallevel

Post

disaster

response

spending

is

not

systematically

tracked

in

anycountry,hinderingeffortstomanageavailablefunding

effectivel ,toidentif a s,andtoensurestron accountabilit

BUTsomeASEANcountriesareworkingonanintegrated

disasterrisk

financing

strategy

s3 asean drfi forum finriskprofiles&impacts nov3

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