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Financial and Fiscal Instruments for Catastrophe Risk Management : Addressing Losses from Flood Hazards in Central Europe

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  • John Pollner
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    Abstract

    This report addresses the large flood exposures of Central Europe and proposes efficient financial and risk transfer mechanisms to mitigate fiscal losses from natural catastrophes. In particular, the Visegrad countries (V-4) of Central Europe, namely, Poland, the Czech Republic, Hungary, and the Slovak Republic, have such tremendous potential flood damages that reliance on budgetary appropriations or even European Union (EU) funds in such circumstances becomes ineffective and does not provide needed cash funds for the quick response and recovery needed to minimize economic disruptions. The report is primarily addressed to the governments of the region, which should build into their fiscal planning the necessary contingent funding mechanisms, based on their exposures. The report is addressed to finance ministries and also to the insurance and securities regulators and the private insurance and capital markets, which may all play a role in the proposed mechanisms. An arrangement using a multi-country pool with a hazard-triggered insurance payout mechanism complemented by contingent financing is proposed, to better manage these risks and avoid major fiscal volatility and disruption.

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    File URL: https://openknowledge.worldbank.org/bitstream/handle/10986/9381/709110PUB0EPI0067869B09780821395790.pdf?sequence=1
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    Bibliographic Info

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    This book is provided by The World Bank in its series World Bank Publications with number 9381 and published in 2012.

    ISBN: 978-0-8213-9579-0
    Handle: RePEc:wbk:wbpubs:9381

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    Postal: 1818 H Street, N.W., Washington, DC 20433
    Phone: (202) 477-1234
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    Web page: https://openknowledge.worldbank.org
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    Related research

    Keywords: Insurance and Risk Mitigation Urban Development - Hazard Risk Management Finance and Financial Sector Development - Debt Markets Banks and Banking Reform Macroeconomics and Economic Growth - Climate Change Economics;

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