Literature review of evidence on disaster risk finance
This research note explores the evidence underlying these assumptions. It seeks to better understand four topics:
- How to boost uptake of DRF instruments;
- Whether incorporating technical assistance in the design of prearranged financing instruments improves timeliness and effectiveness of disaster response;
- Whether there are promising examples of combining DRF instruments; and
- Whether implementing prearranged financing instruments will encourage the private sector to participate more fully.
The scope of the review is focused on the following instruments and (where information is available) on the systems/enabling environment of these instruments: regional risk transfer facilities, contingent financing arrangements, alternative risk transfer instruments such as catastrophe bonds and derivatives, and microinsurance schemes. The section on combining DRF instruments also addresses distribution through shock-responsive safety nets. This research was undertaken to inform the theory of change for the World Bank’s Global Risk Financing Facility (GRiF). It is also intended as a public good that shares the current state of evidence on these four topics with those interested in DRF.