Background facts The Global Risk Financing Facility (GRiF)

In October 2018, the German government joined forces with the UK and the World Bank to set up a new implementation programme to expand and enhance climate risk insurance solutions for vulnerable countries, the Global Risk Financing Facility (External link) (GRiF).

Within this framework, Germany has so far committed 155 million euros (as at June 2020) to support the achievement of the targets of the InsuResilience Global Partnership.

GRiF was set up in order to enhance the financial resilience of poor and vulnerable people in developing countries against natural disasters. It supports governments as they introduce risk financing tools, including market-based insurance. This facilitates earlier and more predictable reconstruction after disasters. GRiF finances activities on the basis of the following six components:

1)         financing of insurance premiums, for instance to pay for risk transfer instruments,

2)         contingent financing, for example buy-down of interest rates to complement risk transfer solutions,

3)         investment in risk financing, for example operating costs and capital for risk pools,

4)         integration of risk transfer through loans to pilot new approaches to support debt sustainability after extreme weather events,

5)         risk financing mechanisms that foster parallel improvements in country systems for crisis response and recovery, and

6)         technical assistance and capacity building.

By mid-2020, GRiF had already approved seven projects. Five of them are country projects – in Malawi, Jamaica, Sierra Leone, Mozambique and Morocco –, one is a regional project to support the regional SEADRIF (External link) risk pool (Southeast Asia Disaster Risk Insurance Facility), and one is a global crisis risk financing project.