Areas of action

Climate risk management

Flash flood in Mozambique. People on their way to a gathering place at the Save river.

Climate change has far-reaching consequences and is one of the greatest challenges the world is facing. Natural disasters, extreme weather and gradual changes such as the rise in sea level cause extensive damage every year. Between 1992 and 2014 these climate-related losses quadrupled to 100 billion US dollars annually. This sum does not include impacts that cannot be measured directly in economic terms, such as the loss of human lives or of cultural assets. Developing and newly industrialising countries are particularly exposed, because the climatic changes are threatening to nullify development progress.

German development cooperation has been working on climate risk management worldwide for some time. Conducting climate risk analyses is an important aspect of its activities. This involves identifying which economic revenue streams are particularly endangered by climate change and to what extent the infrastructure will be affected. Climate risk management also includes preventive measures such as new construction and land-use regulations, establishment and expansion of early-warning systems and preparation of emergency response plans.

However, even the best preparations cannot entirely prevent damage by extreme weather events and gradual changes such as increasing water scarcity. Comprehensive climate risk management therefore includes responses to emergency situations – for example through climate risk insurance that covers the remaining risks to the people affected, such as loss of livestock or damage to buildings.

New report by the World Bank Group

A new report by the World Bank Group evaluates the opportunities and challenges of sovereign catastrophe risk pools as platforms for developing countries to join efforts and access reliable financial protection in case of emergency together.

The report Sovereign Climate and Disaster Risk Pooling. World Bank Technical Contribution to the G20 (PDF 3.6 MB) was commissioned by BMZ preparing the discussions within the G20 and shows that catastrophe risk pools can play an important role in moving the management of storms, floods, droughts and earthquakes away from uncertain, ad hoc humanitarian assistance. The Policy Brief for Policy makers (PDF 1 MB) summarizes the key lessons.

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