The World Bank Group, in partnership with the governments of Germany and the United Kingdom, announced a US$145 million Global Risk Financing Facility (GRiF) to help vulnerable countries manage the financial impact of climate change and natural hazard-induced shocks.
The new facility was announced at the World Bank and IMF Annual Meetings in Bali in the presence of senior representatives of the World Bank and the governments of Germany and the United Kingdom, with support from representatives of the Vulnerable 20 (V20) group of countries.
“Natural disasters push some 26 million people into poverty each year as people struggle with the economic fallout of earthquakes, hurricanes, floods and other catastrophes” said World Bank CEO Kristalina Georgieva. “We can’t stop all these terrible events, but we can help countries with insurance or other risk finance so people get faster help to rebuild.”
Disaster risk finance and insurance mechanisms can help governments have the funds in place when they need them to respond to shocks, while promoting better preparedness and risk reduction. Over the next five years, the GRiF will provide financing to set up mechanisms such as national disaster insurance programs that can help channel money to people affected by disasters when they need it.
“This new Facility will help governments access risk financing and insurance solutions to mobilize effective response and prepare better for climate and disaster shocks”, said Germany’s Parliamentary State Secretary Barthle. “It is key that the new facility focus on the poorest and most vulnerable people.”
In 2017, disasters caused over $300 billion in losses globally – the second highest annual figure ever recorded. Governments of vulnerable countries bear the burden of these costs. The poorest are not only more vulnerable and exposed to immediate impacts but also face longer-term impacts on their development prospects.
“We have all seen the devastating impact of the recent earthquake in Indonesia. Disasters are becoming more frequent and more extreme, leading to the loss of life, homes and jobs, particularly among the world’s poorest people. Through the World Bank’s Global Risk Financing Facility, UK aid is supporting countries to build resilience and put in place finance and systems to ensure they are better prepared to respond to emergencies. This will save lives and also help vulnerable countries recover more quickly after disasters,” said Secretary of State for the UK’s Department for International Development, Penny Mordaunt.
The GRiF will also provide technical assistance to develop, test, scale up, and improve on financial solutions. The Centre for Global Disaster Protection in London, a partnership between the UK and the World Bank Group, will provide specialist support in this effort.
GRiF will directly contribute to the goals of the InsuResilience Global Partnership, launched at COP23 in 2017, and will be a member of its Program Alliance. The GRiF is currently supported by the German Federal Ministry for Economic Cooperation and Development (BMZ) as well as the UK Department for International Development (DFID), and is jointly managed by the World Bank’s Disaster Risk Financing and Insurance Program (DRFIP) and the Global Facility for Disaster Reduction and Recovery (GFDRR).