Climate Risk Insurance and Risk Financing in the Context of Climate Justice – A Manual for Development and Humanitarian Aid Practitioners

Climate Risk Insurance and Risk Financing in the Context of Climate Justice – A Manual for Development and Humanitarian Aid Practitioners
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Climate change is leading to increasing numbers of extreme climate- and weather-related events. These are causing rising levels of climate risks, leading to loss and damage. Climate risks provoke havoc, lead to humanitarian catastrophes, and stand in the way of achieving the Sustainable Development Goals (SDGs).
Thus, it is of great importance to prevent and minimize risks as much as possible. However, there remains a residual risk that cannot be avoided.

This is where risk insurance and risk financing have an important role to play. Climate risk transfer, that is, risk insurance, and risk financing are tools to financially address residual loss and damage by providing financial compensation.

Risk insurance and risk financing are comparatively new concepts in many countries in the Global South, and they are little known in civil society, not to mention vulnerable communities. With increasing climate risks, it is of great importance that this knowledge gap is addressed. This publication, designed as a manual, contributes to close the gap:

• It explains the full range of climate risk transfer approaches, with many case examples and visualizations.

• It introduces a set of climate justice–based criteria, helping readers to assess the advantages and limitations of the various risk transfer approaches. Thereby, readers get a framework that helps them to take positions with regard to risk transfer approaches, be it at the programme or the advocacy level.

• It provides an overview of the different types of climate risks and identifies those risk transfer instruments that are best suited for each climate risk type. Readers learn to assess how far the various instruments to financially protect vulnerable people, communities, and countries can close the protection gap against climate risks, and which would be the specific advantages and disadvantages of each of them.

The manual as an educational tool complements other publications that have been published by ACT Alliance and its members in recent years, tackling similar issues but designed as policy analysis or position papers for expert discourse with policy makers.

In view of its educational character, the manual is accompanied by a series of instructive presentations that cover its main content. These presentations can be used for trainings on climate risk transfer, with the manual as a resource book to deepen knowledge.

The manual is divided into seven main chapters. The first chapter provides an overview of climate risks, how they unfold in different world regions, and what they imply for achieving the SDGs and the goals of the SFDRR. The second chapter briefly presents key elements of disaster risk management and how climate risk insurance and risk financing are placed therein.

The third chapter introduces a framework of climate justice, human rights, and pro-poor principles, providing guidance in assessing climate risk insurance and risk financing approaches. The fourth chapter provides an overview on climate risk insurance approaches, the fifth covers climate risk financing instruments, and both are illustrated with a lot of examples from across the Global South.

The sixth chapter puts the focus on traditional community-level risk management and risk-sharing approaches and discusses how risk insurance and risk financing would fit in.

Special emphasis is put on the role of humanitarian and development practitioners and, more generally, FBOs. The last chapter concludes with the main challenges that remain to make risk insurance and risk financing work for poor and vulnerable people, communities, and countries, and identifies possible entry points for FBOs.

source: https://reliefweb.int/



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