Risk-informed approaches to humanitarian funding: Using risk finance tools to strengthen resilience

The international humanitarian system is exploring ways to respond differently to meet needs in the face of the funding gap. The Directorate-General for Civil Protection and Humanitarian Aid Operations (DG ECHO), through the Inspire consortium, commissioned this study from the Overseas Development Institute (ODI) to explore the role that pre-arranged financing can play in reducing or mitigating disaster impacts by supporting anticipatory action and response. 

The author thus provides the following recommendations:

• Develop a Disaster Risk Financing (DRF) approach for DG ECHO within the disaster preparedness strategy, complemented by more specific DRF operational frameworks at country level;
• Integrate DRF to mainstream a risk-informed approach across the organisation;
• Pilot selected instruments based on further DG ECHO reflection and prioritisation to use the Humanitarian Implementation Plans (HIPs) and emergency toolbox in a more anticipatory way;
• Fund institutional learning and robust, independent research for new and existing pilots to inform scaling and further investment;
• Build incentives for Disaster Risk Reduction (DRR) and resilience into DRF instruments;
• Develop an overarching joint approach on DRF and the nexus between the Directorate-General for International Cooperation and Development (DG DEVCO) and DG ECHO; this is critical to generate traction and impact in DRR and resilience;
• Participate in key networks with donors, practitioners and scientists. Mobilise new and existing networks to co-fund across DRR/resilience, preparedness, anticipatory action and response, for example from development donors and climate funds; and
• Expand DG ECHO capacity to develop frameworks, support internal mainstreaming, and build partnerships.