Flood risk modeling to support risk transfer: challenges and opportunities in data-scarce contexts

This report reviews the processes and challenges in developing flood risk models to support disaster risk financing and insurance and proposes guidelines for risk modeling and risk monitoring in support of flood risk transfer instruments for data-scarce contexts. The guidance in this report is informed by consultations with insurance industry and development sector practitioners including with flood hazard and risk modeling experts, underwriters and brokers, and earth observation specialists.

This report summarizes the state of the art of flood loss estimation for disaster risk financing and insurance. It places DRFI in the context of wider disaster risk management, for managing the residual risks after the effect of FRM strategies. In presenting an overview of catastrophe modeling for flood, we demonstrate the complexity of these models and their data requirements.