Panel Discussion: Risk Finance for the Developing World 

Although focus often lies on insurance, risk finance incorporates a range of protective measures such as savings, access to credit, and social protection measures such as cash transfers, as well as market-mediated risk transfer products such as insurance and catastrophe bonds.

Drawing on largely insurance-based case studies from both the developed and developing world, the panel examined the obstacles to widespread adoption of risk finance at both the macro (government) and micro (community) levels, identifying where risk transfer products such as FONDEN (Mexico's National Disaster Fund), the Caribbean Catastrophe Risk Insurance Facility, and the Turkish Catastrophe Insurance Pool for example, experienced success and failure.

It was suggested that we are hindered not so much by inadequacies in appropriate risk modelling and data, but often by our own perceptions of and trust in risk transfer mechanisms and their efficacy. Discussion arose around the need to communicate more clearly the processes and benefits of risk financing, to overcome the misunderstandings between providers and end users. Promoting greater awareness of people's risks and how they can take ownership of them, as well as incentivising product take up, would potentially help in encouraging more genuine buy-in at the user level.

We heard that innovation in the world of small-scale risk finance at the community level shows promise for protecting people in danger of becoming trapped in the poverty cycle at the hands of increasingly harsh drought seasons. Examples were given of how, with UKAid support, Kenya is implementing a cash transfer system that provides social protection payments that are scaleable in response to drought, and how micro-insurance products are reaching greater numbers of farmers by being bundled with agricultural inputs such as improved seeds and fertilizer.

Finally, we heard that better connecting the impacts and losses of disasters with the causes of those very disasters would be a good place to begin; by more effectively integrating risk financing with Disaster Risk Reduction (DRR) strategies, and addressing the "resilience gap" that still exists in many countries, we would be better placed to pre-emptively strengthen the preparedness of disaster affected nations ahead of catastrophes.

The panel was co-organised by the UCL Institute for Risk and Disaster Reduction (IRDR) and DAI Europe in support of the aims of the DAI led Expert Advisory Call Down Service on Strengthening Resilience and Response to Crisis, working with over 60 partner organisations to deliver rapid response specialist support to UK Government and other donors.