Context:

The G20 under India’s Presidency has endorsed a new working group on disaster risk reduction. This makes it well-positioned to prioritize disaster risk financing to achieve the targets set by Sendai framework for 2030. 

Why the need felt for such a group?

• Recent years have seen an increase in both natural and human-made catastrophes across the globe. 
• The 2021-22 Human Development Report shows that disasters do not merely exacerbate poverty and thwart development, but also generate social polarisation across nations and communities.

Need to develop Strategies:

• The lack of competent financial risk management and insurance has provided a fertile breeding ground for these risks to proliferate and intensify, wreaking havoc on various aspects of society and the economy. 
• Annual disaster losses account for a significant share of GDP in many low-income economies. To manage these risks, financial strategies must be developed.

A crucial role:

• The G20: The G20 has a crucial role to play in supporting countries to strengthen their financial risk management capabilities. 
• States: Every state needs to enhance their capacity to understand risks and integrate them into government planning and budget processes.
• The insurance industry: They need better regulation, legislation, and supervision. 
• Sovereign risk to the capital markets, and the financing for response, recovery, and reconstruction needs to be improved by shifting from ex-post to ex-ante mechanisms. 

Approach to be followed:

• The financial management of disaster risks has been approached in a variety of ways across different economies, reflective of both varying levels of disaster risk and economic development. 

Concerns:

• There is also a scarcity of investment in a development-oriented approach that unites all parties into a transparent framework of action at the national level. 
• Other few significant challenges are difficulty in collecting and analysing data on hazards and exposures, the necessity of strengthening technical and institutional capacity for risk assessment and modeling, and the challenge of achieving comprehensive coverage of disaster risks.

The IPCC’s Sixth Assessment Report:

• It highlights that a significant number of people live in areas that are highly vulnerable to climate change, while the Sendai Framework for Disaster Risk Reduction calls for substantial reductions in disaster risk and losses. 
• As markets and society become more aware of the reality of climate change, there is a growing recognition that disaster resilience must be a priority. 

Conclusion:

• By prioritizing disaster risk financing for the first time, the G20, under India’s presidency can convert good intentions into opportunities for investment.
• India has extensive experience dealing with natural disasters and can lead in promoting awareness of the financial impacts of disasters.
• Through the G20 Disaster Risk Reduction Working Group’s (DRRWG’s) systematic and granular approach, the G20 will make a significant contribution to global efforts to manage disaster risks and build resilient economies and societies.

News Source: The Indian Express