Roadmap for integrated climate risk management: Flood risk and micro, small and medium enterprises in Morocco

Integrated Climate Risk Management (ICRM) is an approach to dealing with the risk and manifestation of climate-related disasters. It is characterised by a holistic perspective with regards to the various components of risk management. ICRM differs from previous concepts in the disaster management paradigm that focused almost exclusively on response, and didn’t pay significant attention to opportunities to reduce the incidence or potential impact of climate disasters.

This roadmap is developed from work undertaken on ICRM through the “Advancing Climate Risk Insurance plus” (ACRI+). In Morocco, ACRI+ is working with Micro, Small and Medium Enterprises (MSMEs) in the Ait-Melloul industrial zone to support the development of financial and strategic capacities for managing climate risks, particularly from flooding, with a focus on the potential role of risk transfer.

This roadmap focuses on the potential role that insurance can play in risk management for MSMEs, recognising not only its function in smoothing the impacts of shocks on businesses but also its contribution to a more mature business model. Risk transfer instruments, such as insurance, are increasingly being used by governments, business and households to reduce the immediate and long-term losses associated with extreme weather events.

Currently, there are significant barriers to establishing risk transferring mechanisms in the MSME market in Morocco. The roadmap identifies some of these barriers and suggests actions and recommendations that could be followed to address these barriers in a manner that considers and integrates risk management principles. The recommendations are intended as first steps that could be taken to scale up risk transfer through insurance within an ICRM framework.