Good practices for mitigating and financing catastrophic risks



Good practices for mitigating and financing catastrophic risks | version française (pdf)

These good practices provide governments and relevant public and private institutions with an integrated, action-oriented framework for the identification of disaster risks, promotion of risk awareness, enhancement of prevention and loss mitigation strategies, and design of compensation arrangements. They were adopted as a Recommendation by the OECD Council on 16 December 2010.


Recent years have seen a rise in the frequency and impact of both natural and man-made catastrophes. The considerable human toll and financial losses resulting from the 2010 earthquakes in Haiti and Chile, the oil spill in the Gulf of Mexico, and most recently the floods in Australia and earthquake in New Zealand, not to mention terrorist attacks, are only the latest reminders of the world’s exposure to large-scale disasters. In times of economic crisis, the need to manage catastrophe risk efficiently becomes more pressing as the cost of catastrophes can be a major drain on governmental resources.


These good practices, which draw on the work completed by the OECD in this area over more than a decade, are geared toward achieving the following main objectives:

  • Create a culture of risk assessment: National disaster risk assessment should be upgraded; regional and international co-operation in the collection and sharing of data on risk exposure and in catastrophic risk modelling should be encouraged;  and information on catastrophic risks should be harmonised where possible.
  • Promote risk awareness and education to aid risk prevention and loss mitigation: Disaster risk is too often ignored or underestimated. The risk perception and long-term goals of the various stakeholders should be taken into consideration as they will determine the role of stakeholders in risk mitigation. Meanwhile, educational efforts to raise risk awareness, especially in disaster-prone areas, are crucial, as human factors can greatly increase or reduce the impact of a disaster.
  • Design catastrophe risk compensation strategies to be ready before the occurrence of a major event: In so doing, the use of resources can be optimised and preparations for each phase of post disaster response from emergency rescue to long-term recovery can be facilitated. Insurance and other financial protection tools have an important role to play.



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