APEC Workshop on Financial Management of Public Assets against Disaster Risks

Situated around the “Pacific Ring of Fire,” APEC economies face significant threats from natural disasters and recognize the need to develop more robust financial management solutions for mitigating disaster risk. With the aim of tackling this common agenda, the APEC Workshop on Financial Management of Public Assets against Disaster Risks was held on June 21-22, 2018 in Tokyo, Japan, as part of a series of activities of the Working Group (WG) on Regional Disaster Risk Financing (DRF) Solutions for APEC economies, under the co-chairmanship of the Philippines and Japan, with technical support from the World Bank Group’s Disaster Risk Financing and Insurance Program (DRFIP) and the World Bank Tokyo Disaster Risk Management (DRM) Hub.

This two-day workshop convened practitioners from finance ministries in APEC member economies to exchange knowledge and experiences specifically on (i) database management, (ii) disaster risk and damage assessment, and (iii) public asset insurance arrangements against climate and disaster risks. Designed as an informal and interactive knowledge exchange, the meeting enabled participating economies to share experiences and practical lessons for public asset management against natural disaster risk, and discuss future plans towards strengthening operational frameworks and implementation of the schemes.  The workshop was followed by a visit to the Kanto Regional Development Bureau of the Japanese Ministry of Land, Infrastructure, Transport and Tourism where participants had the chance to learn more about the ministry’s road and river asset management database system.

Photo: Participants engaging in discussions at the workshop and learning about MLIT Kanto Regional Bureau River and Road Data Asset Management System

In attendance were representatives from the finance ministries of the following APEC economies:  Chile, Taiwan, China; Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Philippines, Russia, and Vietnam. Also in attendance were the representatives of the following organizations: Queensland Government Insurance Fund (QGIF) and Queensland Reconstruction Authority (QRA) from Australia, Asian Development Bank (ADB), Tokio Marine & Nichido Fire Insurance Co., Ltd. (a Sherpa of Asia Pacific Financing Forum), Fujitsu Ltd. (on behalf of Japan Bosai Platform), Japan International Cooperation Agency (JICA), Risk Management Partners Ltd, and World Bank (WB).

Various ideas and key lessons were shared by participating economies, development partners, and experts from public and private sectors around the three key themes. 

Data management

• Economies face challenges in data management, particularly data quality, valuation, standards and infrastructure throughout the whole cycle of disaster risk management. Collecting and maintaining accurate and quality data are important to understand disaster risk exposure and arrange cost-effective (re)insurance programs.
• Legal and institutional frameworks are needed to institutionalize and create governance structures for efficient data management.
• There are different approaches to data management including centralized versus decentralized database management, and the requirement for minimum data standards vary across asset managers/owners for risk assessment.

Disaster risk and damage assessment

• Robust policy, institutional and operational frameworks for disaster risk and damage assessment are key for effective financial management of public assets.
• There are different approaches and tools available for assessment to inform better understanding of disaster risks and financial decision making, including state-of-the-art risk modelling capabilities and technologies to assist (re)insurance arrangements.
• The role of the private sector is significant and critical, particularly in contributing their technical expertise to the design and implementation of risk financing arrangements for public assets. 

Public asset insurance arrangement against disaster risk

• Governments are using a wide variety of programs and entity types for the insurance of public assets. However, despite the diversity of approaches, the decision-making processes sitting behind these approaches share common elements across all countries.
• The balance of reliance on external expertise for insurance functions and insurance decision-making support, versus the retention of in-house technical capacity varies across APEC economies. However, it was clear that the retention of some in-house expertise is vital in ensuring the quality of protection and its alignment with the interests of protected entities.
• The importance of data was raised; the need for consistent and good quality exposure data collection across participating agencies was highlighted, including the need to set certain minimum data gathering requirements; this is vital for accessing cost-effective risk-bearing capacity from the private sector.
• There are unique challenges faced by public sector entities in post-event loss assessment and claims handling that are specific to the insurance of public assets; as such, there is a need to 1) consider in advance what adjustments can be made to standard commercial practices in this area, 2) better fit the atypical nature of losses and procurement processes, and 3) get critical infrastructure and services back on line as quickly as possible.

The workshop concluded that disaster disk finance, especially for resilient infrastructure assets, should continue to be explored as a priority agenda of APEC finance ministers given that disaster risk is a serious challenge faced by all APEC economies.  

Photo: Delegations exchanging ideas on public asset management system

About the World Bank Group’s Disaster Risk Financing and Insurance Program

The Disaster Risk Financing and Insurance Program (DRFIP) helps developing countries address the potentially high cost from disasters and climate shocks. DRFIP provides analytical and advisory services, convening services, and financial services to over 50 countries worldwide to support the development and implementation of comprehensive financial protection strategies against climate and disaster risks. To view an introductory video on disaster risk financing, click here.

For more information, visit https://www.worldbank.org/en/programs/disaster-risk-financing-and-insurance-program.

About the Japan–World Bank Mainstreaming Disaster Risk Management in Developing Countries Program and the Tokyo Disaster Risk Management Hub

The Japan–World Bank Program for Mainstreaming Disaster Risk Management in Developing Countries, launched by the Government of Japan and the World Bank in 2014, supports technical assistance, pilot projects, thematic initiatives, knowledge mobilization, and capacity building along the four pillars of the DRM framework described in the Sendai Report.  The program is managed by the Global Facility for Disaster Reduction and Recovery (GFDRR) and implemented by the Tokyo Disaster Risk Management Hub (Tokyo DRM Hub).