Principles of climate risk management for climate proofing projects

This working paper identifies opportunities to update the Asian Development Bank (ADB) climate risk management (CRM) process and climate risk and adaptation assessments (CRAs). The intent is to streamline the Climate Risk Management (CRM) framework with a fit-for-purpose approach and to improve the quality and consistency of CRAs. To this end, a set of guiding principles aligned with the three main phases of the ADB project cycle -conceptualization, preparation, and implementation- is presented here.

The principles highlight the value of a more strategic method for upstream activities, as well as the benefits of a differentiated approach, in view of the varying CRA needs of projects. Specific principles are proposed for improving the main CRA steps, with a focus on project understanding and decision-led risk assessment, and on the prioritization of adaptation options. Finally, the paper emphasizes the need to strengthen downstream activities, to ensure that good practice flows into implementation. The paper provides useful lessons and insights into climate risk management for ADB and its developing member countries, as well as information relevant to climate risk assessments of investments.