Quantifying Disaster Risk and optimizing investment Sujit Mohanty UNISDR – Asia Pacific Protecting development gains: A path towards resilience

Escalating losses Total economic losses (1981 – 2011) in million US$ for selected countries Source: GAR 2013

Our collective aim… “Substantial reduction of disaster losses, in lives and in the social, economic and environmental assets of communities and countries” “ Expected outcome” of the Hyogo Framework for Action : Building the Resilience of Nations and Communities to Disasters (Hyogo Framework)

One starting point of understanding ‘Disaster Risk Reduction’ and the path towards ‘Resilience’ could be by :- Measuring ‘Losses’ over time Risk can not be ‘Managed’ or ‘Reduced’ if it can not be ‘Measured’

Understand risk Quantify economic losses (in past and in future) Understand investment (how much, when, where) Track investment in DRR Analyze cost and benefit of doing DRR Optimize investment (no one has unlimited resource) Optimizing investment in DRR to safe guard development gains Only works if backed by a strong National Coordination Mechanism/ National Platform

Optimizing public investment in DRM Q1 How much money should be allocated to DRM? (size of total pie) Q2 How to decide the most efficient and effective allocation of money between option A (risk reduction) and B (risk transfer and risk retention)? (how to divide the pie) Q3 How to comprehensively plan and finance risk reduction policies? For example, how to design risk sensitive investment mechanism? Q4 How to design risk transfer and risk retention schemes? Component 3

Process of evidence-based decision making STEP1 : Produce risk profile (annual average loss & probable maximum loss). STEP2: Choose the return period to cover : political decision STEP3: Define the expected level of DRR: political decision STEP4: Measure the impact of policy tools on DRR (avoided economic loss) STEP5: Check the gap between the expected level of DRR and current level of DRR STEP6: Decide how to do with the gap: implement more DRR or transfer risk? :political decision

Country perspective: Investment decisions Can you avoid the risk? Prospective DRM (Risk Avoidance) Prospective DRM (Risk Avoidance) Can you mitigate the risk? Risk Retaining Risk Transfer Prospective DRM (Risk Mitigation) Prospective DRM (Risk Mitigation) Can you transfer the risk? Yes No Yes No Risk Reduction Risk Finance Hazard, Exposure, Vulnerability Disaster losses (past) Future Risk (Probability of losses or Annual Average Loss) Cost and benefit

Investment Planning (Cost and Benefit) optimize public investment in DRM Risk management tools for Govts. To affect private corporations and households To assure government business continuity & public asset protection Evidence based decision making Optimization of investments/ resources

Investment Planning (Cost and Benefit) optimize public investment in DRM Risk management tools for Govts. To affect private corporations and households To assure government business continuity & public asset protection Evidence based decision making Optimization of investments/ resources

Hazard Vulnerability Exposure Socio economic data/ Social statistics Spatial/ GIS data/ Climate data … Current status of investment Risk transfer and risk financing Disaster losses (Past and future) Disaster losses (Past and future) Capacity Information and data Also needs better governance (National Coordination Mechanism/ National Platform) In addition to traditional DM agency, MOF and Planning Authority should be key stakeholders. Sectoral ministries, especially Ministry which has responsibility for infrastructure building, are also important stakeholders Private sector, especially insurance sector and construction sector, had better be mobilized for cooperation

The enabling factor: National Platform Nationally owned and led forum of multi stakeholders a coordination mechanism for DRR mainstreaming in development Serves as advocate for DRR at all levels Coordination, analysis, and advice on priority setting Engaging higher level policy makers Facilitating dialogue and partnership among national and international organisations

Country context: Asia Pacific region ( Lao PDR, Cambodia, Myanmar, Maldives, Srilanka, Mongolia) Proposed actions: 1.DRR landscape mapping ( institutional mechanism, national coordination mechanism, who is doing what …) 2.National disaster loss accounting (existing) 3.Probabilistic risk assessments to estimate future losses. 4.Study of public investment practice (In collaboration with ADB) 5.Study of current risk information use and availability (in collaboration with ADB) 6.Cost benefit analysis 7.Optimal investment plan 8.A strong national coordination mechanism to implement overall DRR in the country through sectoral investment planning( national platform) [KEY]

Thank You …