Societies continue to bear increasing costs from natural hazards as population growth, the geographic concentration of economic and infrastructural assets in vulnerable areas, and the effects of climate change are accelerating exposure to potential losses.
The financial losses from disasters are a systemic financial risk. They cascade through the financial system, with capital flight from vulnerable sectors and communities, sovereign credit risk, sovereign defaults, sudden and sharp write downs from devaluation and insurance premiums. This can create new risks and/or reinforce existing inequalities. Ultimately, they challenge the ability to raise investment to increase resilience.
Resilience requires a layered financial strategy bringing to bear all sources of financing and risk prevention projects need to draw on all potential beneficiaries for funding. Innovative financing models such as blended finance and impact investing have emerged as tools for addressing risks and encouraging the private investments that can transform people’s lives and contribute toward Sendai Framework implementation. This session will discuss and explore the implementation and scale-up of innovative market-driven products and options for the financing of resilience.