Management of the World Bank welcomes the evaluation report by the Independent Evaluation Group called Reducing Disaster Risk from Natural Hazards: An Evaluation of the World Bank’s Support, Fiscal Years 2010–20.

Overall

Management welcomes the report’s finding that the World Bank’s support for disaster risk reduction (DRR) has been highly relevant and has made significant progress in mainstreaming DRR in its lending operations and analytic work. Management will strive to incorporate lessons to continue improving. Management notes the observation that World Bank support for DRR in International Development Association countries, in small states, and in fragile and conflict-affected situations has been particularly comprehensive. Management also appreciates the conclusion that the World Bank’s sustained engagement in DRR; its prioritization of DRR both through increased investment (DRR support has tripled since fiscal year [FY]10, as the report noted) and policy dialogue; and its sizeable lending programs have achieved highly successful results. The report also identifies useful opportunities for improvement, many of which are already being explored by the World Bank, making some aspects of the recommendations redundant, albeit well directed. As stated in the Management Action Record FY22, management has observed that the effects of the Independent Evaluation Group’s evaluations often start long before the issuance of the formal report, as evaluation processes highlight key issues, inspire new ways of thinking, and enable real-time learning and adaptation. Management and the Independent Evaluation Group have had a dedicated discussion on the recommendations for this evaluation to solidify their shared understanding of possible actions and evidence for future Management Action Record reporting.

Management notes that the report focuses primarily on disaster insurance rather than framing it in the broader strategic context of disaster risk finance (DRF). Although the report acknowledges that disaster insurance is a part of the World Bank’s overall DRF efforts (59), the report suggests a focus on risk insurance—the first chapter indicates the projects discussed in the report pertain only to disaster insurance (5). Disaster insurance is just one aspect of DRF, and there is much more to the World Bank’s work on DRF than disaster insurance as narrowly defined in the report. Beyond insurance, the World Bank’s DRF strategies build on a risk-layered approach that addresses risk retention and risk transfer supported by World Bank interventions;1 uses disaster funds;2 promotes adaptive social protection schemes;3 manages a national program of insurance of public assets;4 and promotes domestic catastrophe risk insurance markets.5 The World Bank has also mobilized more than $5.5 billion in private risk capital through catastrophe bonds, risk pools, and other parametric insurance programs to cover emerging markets and developing economies against disasters and climate shocks. Although the report provides good coverage of the World Bank’s work in East Asia and Pacific, it could do more to discuss the successful establishment of risk pools such as the Caribbean Catastrophe Risk Insurance Facility.

Management emphasizes that World Bank–supported insurance instruments are intended to facilitate access to market-based disaster risk insurance solutions within broader country-driven DRR strategies. The decision to purchase such products is the responsibility of the beneficiaries, be they governments, businesses, or households. DRF and risk transfer, of which insurance is but one instrument, should be placed within the broader DRR strategy of a country. High-frequency and high-impact events are expensive for countries to insure against without broader mitigation measures in place. A range of products are needed to provide DRF, while measures to reduce disaster risk take place in parallel. This explains the report’s observations that World Bank–supported disaster insurance activities targeting businesses and households did not always reach scale (60–62).6 It is important to have firm plans to reach set targets alongside any chosen coverage as demonstrated in the Mexico and Colombia examples included in the report.

Recommendations

Management agrees with the first recommendation while noting that the World Bank is already developing risk assessments to better incorporate DRR activities in regions, sectors, and hazards—that have had coverage gaps—and it will continue to do so, incorporating insights from the report.7 This includes high-impact low-frequency events. The World Bank has undertaken considerable work on awareness-raising and risk identification for different hazards.8 It merits emphasis that World Bank diagnostics and engagements are (i) strategic, given resource limitations; and (ii) demand-driven, given the competing development priorities of client countries. There are various underlying reasons for the coverage gap, including limited client bandwidth and the fact that immediate disaster responses are sometimes outsourced to humanitarian organizations, as highlighted in box 2.1 of the report. The report itself notes that hazard types that are far less frequent or less catastrophic in impact receive less attention when compared with more frequent and damaging hazard events. Although less frequent but potentially damaging hazard events are important to assess, convincing clients to borrow to address the risk of such events is difficult, given the lower probability of the occurrence of a disaster, and the lower development priority for clients.

Management agrees with the second recommendation on the importance of generating more ex post evidence while emphasizing that the identification and measurement of the potential effects of DRR activities is challenging, as there is no agreed or uniform level of acceptable risk. It is important, instead, to provide information on risk, impact, and associated uncertainty to ensure that decision makers are informed. This would include (i) disaster risk and potential impacts on the performance of projects or systems of concern; (ii) project or system robustness, whether it concerns construction standards or economic returns in the face of disaster risks; and (iii) impacts of climate change on the intensity and frequency of disasters as they pertain to resilience standards and project performance. Avoiding losses is another way to assess investment effectiveness. The World Bank measures co-benefits in terms of functionality of infrastructure be it of retrofitted schools, hospitals, or other public facilities; improved road networks and so on; the positive socioeconomic impacts; or climate co-benefits.9 The World Bank’s Resilience Rating System and climate and disaster risk stress testing in its economic analysis are key resources for the evaluation of the robustness of DRR activities. The World Bank has done considerable work in these areas and would certainly benefit from generating more systematic ex post evidence of effects.

Management agrees with the third recommendation on the need to systematically integrate population segments vulnerable to disasters in DRR interventions and will build on its own analytical work on the matter, such as the 2017 report Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters. Meaningful engagement of affected communities is undertaken for sustainable risk reduction measures and to ensure that they respond to local priorities. The World Bank has already moved in this direction through its integration of disaster and climate risk management in its Community-Driven Development programs in a few countries such as Bangladesh, the Philippines, and Indonesia, and through the development of devolved climate finance in Kenya (the latter incorporates participatory climate risk assessments into the development planning process). There has been analytical work carried out by the World Bank in Africa, Europe and Central Asia, Latin America and the Caribbean, and South Asia to advance social inclusion in disaster risk management through resilient investments across Global Practices. The World Bank established a group of practitioners that convenes the Urban, Disaster Risk, Resilience, and Land Global Practice, the Global Facility for Disaster Reduction and Recovery, the Social Sustainability and Inclusion Global Practice, and the Gender Group to provide technical assistance and guidance to task teams on the inclusion of vulnerable population segments. Adaptive social protection is another instrument intended to reach vulnerable populations. Several World Bank–supported Social Protection Systems were designed to assist population groups that are among the most vulnerable to disasters, that is, women, children, elderly people, persons with disabilities, and poor people. For example, in Fiji after Cyclone Winston, the Fiji National Provident Fund (pensions) and Social Pension Scheme (family benefits) were used to deliver assistance to all enrollees. Relaxed targeting (that is, no assessment of direct impact) or secondary means testing ensured timely disbursements credited with accelerating Fiji’s recovery.10 There are other instances of catastrophe deferred drawdown options with prior actions related to persons with disabilities.11

Management agrees with the fourth recommendation, although it considers it redundant, as the World Bank has already undertaken significant innovative work in identifying and assessing the ways in which natural hazards and conflict interrelate. Management strives to ensure that such diagnostics permeate operations. The World Bank launched a global program on the disaster risk management–fragility conflict, and violence (FCV) nexus in 2021. However, diagnostics and analysis on this critical area has been informing the World Bank’s work for much longer—the 2008 Post-Disaster Needs Assessment undertaken in Myanmar after Cyclone Nargis identified DRR actions specifically aimed at addressing root sources of conflict and fragility in the country. In subsequent years, the World Bank worked with development partners to support annual post-Nargis Social Impact Assessments to understand how DRR had an impact on drivers of fragility. Additionally, there were numerous in-conflict damage and needs assessments conducted specifically in Middle East and North Africa and Africa that integrated DRR principles—such as Build Back Better—into the analysis to address DRR-FCV link. In the FCV group, the Global Crisis Risk Platform continues to strengthen the World Bank’s analytical understanding of the nexus between disaster risk and conflict. For example, the recently completed retrospective studies of floods and droughts in Ethiopia and Kenya explore the interaction of natural hazards with FCV dynamics. Similar studies are underway for Honduras and Pacific Island countries. In addition, the World Bank’s Regional Risk and Resilience Assessment (RRA) of the Central Asia-Afghanistan border areas and its Afghanistan RRA both address the nexus between natural hazards and FCV. The Lake Chad RRA (2021) and the Sahel RRA (2019) similarly discuss the link between access to natural resources and conflict heightened by the impact of climate change or drought on production systems, livelihoods, and food security of communities, leading to displacement and increased conflict. The Global Crisis Risk Platform and the Global Facility for Disaster Reduction and Recovery through the Program for Disaster Risk Management in Situations Affected by Fragility, Conflict, and Violence will continue and further strengthen their collaboration on the nexus between natural hazards and FCV, including under the recently developed Crisis Preparedness Gap Analysis diagnostic tool and a Compound Risk Monitor, which is currently being developed by the Global Crisis Risk Platform.

Reference

Tanner, Thomas, Swenja Surminski, Emily Wilkinson, Robert Reid, Jun Rentschler, and Sumati Rajput. 2015. The Triple Dividend of Resilience: Realising Development Goals through the Multiple Benefits of Disaster Risk Management. Washington, DC: World Bank Group.