ASEAN disaster risk financing plan moves into phase two

Phase two of the ASEAN Disaster Risk Financing and Insurance (ADFRI) programme will focus on three core elements – risk assessment, risk advisory and capacity building – according to Jacqueline Loh, deputy managing director, Monetary Authority of Singapore (MAS). In a recent speech at the Nanyong Technological University – Institute of Catastrophe Risk Management’s (NTU-ICRM) tenth Annual International Symposium on Catastrophe Risk Management in Singapore, Ms Loh said the level of catastrophe exposure in the region had reached “boiling point”. She pointed out that Asia has borne the brunt of catastrophes during the last 50 years. During this period, Asia accounted for half of the world’s economic losses from natural disasters, amounting to more than $1.3trn. In 2018, Asia was again the worst affected – hit by a number of significant events, including: Typhoons Jebi and Trami, which affected Japan and Taiwan Typhoon Mangkhut, which impacted mainly Hong Kong, China and Philippines Earthquakes and tsunamis in Sulawesi. During the conference, Ms Loh officially launched phase two of the ADFRI programme, which is designed to help the region’s economies recover from such disasters. ADRFI phase two, which was approved by ASEAN finance ministers back in April and is built on a detailed three-year action plan, will be impact-focused and targeted at strengthening ASEAN’s capabilities in ex-ante risk financing and risk transfer strategies, said Ms Loh. The action plan will be implemented by a dual programme office, to be led by the ASEAN secretariat and the NTU-ICRM. “The dual programme office will adopt an open-architecture structure to support global collaboration with stakeholders including policymakers, governments, multilateral development banks, international organisations and the private sector,” said Ms Loh. The three-part programme – built on risk assessment, risk advisory and capacity building – will “strengthen ASEAN’s disaster risk management capabilities and complement the downstream public and private disaster risk financing solutions”, explained Ms Loh. To help with assessment, the new ASEAN Data and Analytics Platform is being created to construct a high-resolution and objective natural catastrophe database for the region. This platform will use remote-sensing technologies such as satellite imagery, and advanced extraction techniques, to produce top-down economic exposure data. “Such data includes building attributes like age and type of construction, as well as building values, [and] will be fused with bottom-up insurance exposure and loss data, to form a holistic and more accurate picture of risk,” explained Ms Loh. The risk advisory element of the plan is based on bringing together demand and supply. “On the demand side, ASEAN member states have varied needs, due to differences in economic assets, population size, types of hazards and exposures faced, and the stage of development of their respective disaster risk financing strategies and markets,” she said. “On the supply side, there is a wide range of disaster financing solutions [available], such as insurance, reinsurance, index-based products, parametric covers, insurance-linked securities and regional pools; and many solution providers, ranging from private insurance and insurance-linked securities markets, [to] multilateral development banks and international organisations,” added Ms Loh. The MAS executive said ADRFI can connect both sides together and play the role of analysing countries’ needs, harnessing the risk advisory expertise of stakeholders, and structuring optimal and cost-effective disaster risk financing strategies. The capacity-building pillar will focus on enhancing knowledge of disaster risk financing strategies and solutions, and equip policymakers with a good understanding of regulatory, legal, administrative and technology pre-conditions to deploy effective disaster risk financing solutions, added Ms Loh. The ASEAN secretariat will work with “knowledge partners” such as the World Bank, Asian Development Bank, Insurance Development Forum and the insurance industry to develop and implement a three-year training roadmap to address ASEAN’s knowledge gaps, said Ms Loh. “By forging public-private partnerships amongst various stakeholders, including policymakers, international organisations and the private sector, ADRFI will play a key role in forging a robust and comprehensive disaster risk financing strategy in the region. This will help to strengthen ASEAN’s disaster risk resilience, and move our economies onto a sustainable and inclusive growth path,” concluded Ms Loh.

ASEAN disaster risk financing plan moves into phase two

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