Chapter 6 - GFDRR

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leaving information standardization a formidable task. • Multiple departments are charged with China’s natural disaster management, and there is a lack of an effective and comprehensive sharing platform for the large amount of data. The data resources of the relevant departments need to be optimized. • The temporal and spatial precision of data concerning China’s major natural disaster environment background and its economic and social background needs to be further improved and still falls short of demand for high-precision assessment of major natural disaster risk and loss. Disaster Risk Assessment Suggestions concerning the enhancement of international cooperation in disaster risk modeling and assessment • Strengthen international scientific research exchange and cooperation. The concerned countries could discuss relevant scientific issues and key technologies regarding disaster risk modeling techniques and risk models and could exchange information on their latest developments through intergovernmental coordination and cooperation among academic institutions. Those countries can also conduct studies on research results integration and application demonstration in line with their real circumstances and successful cases. • Establish a platform for demonstrating achievements. UNISDR and the World Bank can jointly lead such efforts as establishing a specialized website on natural disaster risk modeling and risk assessment to provide a sound interactive platform for exchanging information on the latest research progress and cases of various countries. • Carry out targeted financing cooperation. A regular exchange and cooperation mechanism for risk modeling and assessment between developed and developing countries should be encouraged and established. A cooperative method featuring targeted financing (with fixed fields of financing and fixed number of years) by developed countries for developing countries can be adopted to establish and improve disaster risk modeling and assessment studies and demonstrative application in developing countries. • Prioritize the design of the disaster risk assessment and adaptation plans for global climate change. Given the increasing frequency and intensity of extreme weather and climate incidents caused by global climate change, attention should be paid particularly to the impact of climate change on a disaster risk formation mechanism, the new disaster risk assessment models, and the new disaster risk landscapes. • Formulate and implement the international cooperation plan on catastrophe risk models and assessment as soon as possible. In recent years, the world has suffered from increasing numbers of catastrophes and extreme losses. Unlike ordinary disaster risks, catastrophes are often compounded by multiple disasters and the disaster chain effect. The international community has a huge demand for study in catastrophe formation mechanisms, scenario analysis, and numerical simulation, and such cooperation is of great significance. Suggestions concerning the establishment of an open and unified hypothesis and methodology to promote exchange between the government and the financial market On the one hand, cooperation among government, research institutions, and enterprises should be promoted. Enterprises should be encouraged to fully participate in the risk assessment process of major natural disasters. The mechanism for enhancing coordination among the government, research institutions, and enterprises should be strengthened to promote exchange and cooperation between government and enterprises and to realize effective communication between the government and Improving the Assessment of Disaster Risks to Strengthen Financial Resilience 127
the financial market. Studies on the relationship between natural disasters and risk-sharing holders should be enhanced. On the other hand, the threshold value of natural disaster risks should be defined. Because of the high uncertainty of natural disaster risks, holders of risks and insurance companies have difficulty in grasping the characteristics of losses. The risk assessment methods should be continually improved so that risk losses can be calculated within a proper value and the market’s financial entities can have some understanding of the threshold value of natural disaster risks. Risk Financing Strategy Suggestions with regard to helping policy makers establish a comprehensive strategy for natural disaster risk financing and transfer through optimizing risk information and risk models On the one hand, the publicity and standardization of natural disaster risk information should be promoted. The key to implementing disaster risk financing and transfer strategies is to achieve the publicity and standardization of risk information and, in turn, enhance information sharing by optimizing risk information and integrating data. On the other hand, risk losses and costs to mitigate them should be clearly defined. Many methods, such as risk calculation, loss assessment, demand analysis, and analysis of disaster reduction capabilities, can be used to help governments at all levels learn about the severity of risks and their distribution, the measures that should be taken in coping with the risks, and the costs incurred in avoiding the risks, so that rational decisions can be made in industrial distribution, urban planning, and residential district construction. Suggestions with regard to improving cost-effective returns from market-based risk transfer plans through optimizing risk information On the one hand, it is the common responsibility of the government, enterprises, and the public to strengthen the awareness of risk prevention, publicize risk information in a timely manner, and allow the public to know and recognize disaster risks so that they can have a correct understanding of disaster risk prevention. Stakeholders should be encouraged to accept the market transfer plan of risks implemented by the government. On the other hand, the accuracy of the risk assessment model should be improved so that the government measures can be more in line with the development rules of natural disasters to lower the implementation costs of risk transfer plans. In this way, government compensation and market risk transfer plans can be optimized. China’s main experiences in emphasizing the role of the government, the private sector, and public-private cooperation to push forward the sharing of risk information and risk assessment tools • Strengthening legal system construction. Legal protection should exist for the participation of private entities in natural disaster risk sharing, and market supervision should be strengthened and explicitly defined so that the responsibilities and duties of the concerned parties are unambiguous. • Strengthening information disclosure. Information should be made public. In 2005, the Chinese government announced it would make public the documents concerning the death toll caused by natural disasters and related materials. In the wake of the 2008 Wenchuan earthquake, the earthquake information was publicized in a much more transparent and timely manner, which played a positive role in pushing forward the 128 Improving the Assessment of Disaster Risks to Strengthen Financial Resilience
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Chapter 6 - GFDRR

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