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Launch of OECD Methodological Framework on Disaster Risk Management

 

‌Remarks by Angel Gurría, OECD Secretary-General at a press conference to launch the OECD Methodological Framework on Disaster Risk Management

Mexico City, Sunday, 4 November 2012

(As prepared for delivery)


Ladies and Gentlemen,

‌Major disaster events in recent years, for instance in Haiti, Japan, and no later than this week in the United States, have shown that disasters can have widespread impacts, causing not only harm and damage to lives but also impairing economic activity. In the context of a tightly integrated global economy, disasters can have strong spill-over effects, disrupting global supply chains and featuring cascading and global effects.  The Fukushima Tohuku earthquake has shown just that - highlighting the vulnerability of the automotive industry global supply chains.  

 

Angel Gurría, OECD Secretary-General, Jose Antonio Meade Kuribeña, Mexican Minister of Finance and Jim Yong Kim, President, World Bank.

Considering the increasing frequency and scale of disasters and their potentially important spill-over effects, distater risk management is a very relevant area for international cooperation, including at the G20 level.

In this context, I am pleased to offer the framework prepared by the OECD to this meeting of G20 Finance Ministers and Central Bank Governors. It has benefited from contributions from many experts around the world, including members of the G20 Country Steering Group on disaster risk management, several OECD Committees and fora as  well as from the World Bank and the United Nations.

The framework is designed to help Finance Ministries and other authorities to develop financial strategies for disaster risk management. Based on country examples and best practices, the framework offers a series of concrete steps to develop risk assessment as a key step for promoting risk financing strategies. It is voluntary, flexible, and non-prescriptive.


Let me highlight some of its key conclusions:

1. Risk assessment: Risk assessment is a critical foundation for disaster risk management and will benefit both developed and developing countries as it enables a clear, comprehensive review of country risks and a proper evaluation of disaster risk reduction measures. There is scope for sharing data and techniques in this domain - the so-called “best practices” - and countries can mutually help to close capacity gaps.

2. Risk financing: By promoting financial resilience against disasters, risk financing helps to ensure that economies can rebuild and resume their activities after a disaster.

The government plays a key role in assessing the extent of financial coverage and developing a comprehensive financial strategy that leverages both private and public resources to help ensure financial resilience against disasters.


Finance ministries in particular have a critical role to play in:

  • Coordinating other ministries' contributions to the assessment of the financial and economic impacts of disasters;

  • Ensuring that individuals, businesses and governments have the financial capacity to meet disaster costs, for instance, through the development of insurance markets, government assistance schemes and other policy tools;

  • Ensuring effective fiscal management of disasters by anticipating budgetary impacts and planning ahead to ensure adequate financial capacity, rapid release of funds and swift compensation. For example, in Australia, pre-determined compensation rules proved to be effective in ensuring that disaster aid was prompt and met the needs of recovery and rebuilding; and

  • Ensuring the soundness and resilience of the financial sector to absorb disaster risks, for instance through adequate capital, business continuity planning and stress testing.


Future work would include:

  • Developing a further understanding of budgeting for disasters, e.g. identifying, pricing and budgeting of contingent liabilities;

  • Considering mechanisms to enable sustained prevention and mitigation investments (e.g., mitigation funds), complementing the focus of the framework on the financial management of disaster losses;

  • Examining the potential impacts of disasters on financial infrastructure and systems, focussing on their sustainability and business continuity; and

  • Developing guidance and case studies for developing countries operating in extremely resource-scarce environments where people may be highly vulnerable to disasters and lack access to resources to mitigate impacts.


Looking forward, I hope that this framework will be a key instrument in supporting both international and country efforts toward more effective disaster risk management  strategies. Thank you.

 

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Visit of the OECD Secretary-General to Mexico (1st - 6th November 2012)

 

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