Using Probabilistic Models to Appraise and Decide on Sovereign Disaster Risk Financing and Insurance

Ley-Borrá ; s, Roberto ; Fox, Benjamin D.

World Bank, Washington, DC

关键词: FINANCIAL RISK;    CONTINGENT LIABILITIES;    CATASTROPHIC EVENTS;    RISKS;    CAPITAL MARKETS;   

DOI  :  10.1596/1813-9450-7358
RP-ID  :  WPS7358

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper presents an overview of thestructure of probabilistic catastrophe risk models,discusses their importance for appraising sovereign disasterrisk financing and insurance instruments and strategy, andputs forward a model and a process for improving decisionmaking on the linked disaster risk management strategy andsovereign disaster risk financing and insurance strategy.The paper discusses governments use of probabilisticcatastrophe models to inform sovereign disaster riskfinancing decision making and describes the ex ante and expost financing instruments available for responding toextreme natural events. It also discusses the challenge ofappraising sovereign disaster risk financing and insuranceinstruments, including a review of the multiple dimensionsof disaster risks and the value that probabilisticcatastrophe risk models provide. The decision makingframework for sovereign disaster risk financing andinsurance put forward by the paper includes the use of adecision model (an influence diagram) as a rigorousrepresentation of the relationships between the decisions,uncertain events, and consequences relevant to sovereigndisaster risk financing and insurance decision making. Theframework also includes a process for generatinghigh-quality customized components for the decision model,and a tool for designing coherent sovereign disaster riskfinancing and insurance strategies. The paper ends withsuggestions for improving catastrophe risk models tofacilitate sovereign disaster risk financing and insurancedecision making.