IDF: Enhancing Risk Modelling and Disaster Finance through Data Empowerment

RMSG Co-Chairs: Jenty Kirsch-Wood, Head of the Global Risk Analysis and Reporting Section, United Nations Office for Disaster Risk Reduction (UNDRR); Jeffrey Manson, Senior Vice President, Underwriting, Head of Global Public Sector Partnership, RenaissanceRe; Technical Lead Disaster Risk Consultant Stuart Fraser; and Nick Moody, coordinator of the RMSG and co-lead of the Global Risk Modelling Alliance (GRMA)

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A global shortage of actionable climate and disaster risk information is restricting investment in resilient development and risk finance, leaving vulnerable communities and economies exposed. Climate policy forums such as COP tell us that investment in adaptation and resilience is just as important as reducing carbon emissions, but the reinsurance industry knows better than anyone that money will only move if it knows the risk involved.

Resilient capital flows can only be unlocked through sharing the language of risk quantification across sectors - such a task demands a concerted effort to adapt and disseminate the risk analytics capability of the re/insurance sector, particularly in countries most vulnerable to the impacts of climate change.

Our call to action is simple: risk-literate users in vulnerable countries should be able to access all relevant models and datasets, use them on their preferred platform, develop them further and have trust in the results. The reinsurance industry can help - not only because it is the right thing to do, given the challenges we are all facing, but also because it is strategically sound to grow confidence in emerging markets.

Enhanced risk understanding at the local level will lead to a much higher standard of decision making in resilient investment and residual risk transfer. It will also make for a more informed and equal conversation with markets and international finance institutions.

In our pursuit of better risk insight in this dynamic risk environment, a number of collaborative initiatives are gaining momentum and are poised to shape the discourse this year and beyond at the forefront of improving risk modelling infrastructure and delivering content and capability where it is needed.

One of the notable initiatives is the Global Risk Modelling Alliance (GRMA), a public-private programme offering services and funding in capability development to sovereigns wanting to strengthen their risk insight. The GRMA was initiated by the IDF in an agreement with the Vulnerable 20 Group of Finance Ministers of the Climate Vulnerable Forum (V20), and was launched in 2022 with 21m EUR of funding from the German Federal Ministry for Economic Cooperation and Development (BMZ).

Continuously supported by industry members - AIG, Aon, AXA, AXIS Capital, Convex, Guy Carpenter, Howden Group, RenaissanceRe and SCOR - this programme supports governments with insurance risk analytics expertise and funding for models, all using open data standards and the industry’s OasisLMF open modelling platform.

GRMA & the Global Shield

This need to accelerate the adoption of risk measurement is increasingly recognised by the development sector. For example,the GRMA has been identified by the Global Shield against Climate Risks (Global Shield) as a key resource, particularly during initial in-country climate risk assessments and subsequent capacity building.

The GRMA is already operating in five countries, including the GRMA’s partnership with the Global Shield’s first country programme, in Ghana. In consultation with the GRMA and Global Shield, the government of Ghana has made its priorities clear, in requesting modelling support and risk finance to protect subsistence farmers at risk from flood and drought, MSMEs at risk from urban flood, and coastal communities and infrastructure vulnerable to storm surge.

Expanding Reach and Impact:

As well as in Ghana, the GRMA is now operational in Pakistan, Costa Rica, Madagascar, and Nigeria, supporting tailored risk information programmes designed to address diverse risk priorities, enhancing national capabilities in disaster risk information management.

In Pakistan the subject matter is the effect of extreme heat on crop loss, and flood risk to inform the national social protection scheme, the Benazir Income Support Programme (BISP). Meanwhile in Madagascar, the main concern in terms of filling the risk information gap is loss and damage due to tropical cyclones, as well as building national capability in disaster risk information management.

And, following GRMA workshops in Costa Rica and Nigeria, further diverse risk priorities have been identified together with partner ministries and agencies in advance of their formal application for funding support.

In Costa Rica work will include potential impacts of infrastructure loss due to flood and seismic hazard, as well as risk pricing for the protection of natural assets such as mangrove. Work continues in identifying Nigeria’s priorities, but urban flood and agricultural livelihoods are likely to be top of the list.

Our target is for the GRMA to reach 12 operational countries by 2025, including support for Global Shield Pathfinder countries as required.

The Resilient Planet Data Hub

Furthermore, the announcement of the Resilient Planet Data Hub (RPDH) at COP28 marked another pivotal moment in our journey towards data empowerment. Developed by the Global Resilience Index Initiative in a collaboration between the IDF, University of Oxford, and UN Office for Disaster Risk Reduction, the RPDH provides an open risk data portal to bring a common language of risk for all.

It is a key resource for aggregated risk managers such as ministries, asset managers and investors, international finance institutions, and standard setters such as regulators and ratings agencies. The RPDH offers globally consistent risk and resilience data under current and future climate conditions, as well as case studies showing how it can be used to address risk estimation across the UN headings of People, Planet and Prosperity.

Underlying all of this, the RMSG’s Technical Programme continues to drive innovation through projects like our planned development of an insurance-grade open Global Exposure Model, and further development of the Oasis Risk Explorer entry level modelling tool, to name just two. By forging partnerships between companies and public sector entities, we aim to harness the collective expertise towards addressing pressing challenges and advancing the frontier of risk modelling.

Looking Ahead

We are committed to accelerating private sector engagement, expanding humanitarian initiatives, and fostering collaboration with the other IDF working groups to amplify our impact.

As Global South partners navigate the complexities of the risk landscape, our focus on practical support and respect for local autonomy is building a position for the industry as a trusted partner for the public and domestic private sectors.

Initiatives like the GRMA and the Resilient Planet Data Hub exemplify our dedication to providing accessible, actionable insights to those most vulnerable to natural hazards. Through partnerships with local governments, ministries, and agencies, we are actively working to address diverse risk priorities and build national capabilities in disaster risk management. From Ghana to Pakistan, Costa Rica to Nigeria, our efforts are tailored to the specific needs of each country, whether it’s protecting agricultural livelihoods, mitigating urban flooding, or safeguarding infrastructure.

Looking ahead, we remain steadfast in our commitment to accelerating private sector engagement, expanding humanitarian initiatives, and fostering collaboration across sectors. By harnessing the power of data and collective expertise, we can navigate the complexities of the risk landscape and build a more resilient future for all. The contribution of the re/insurance sector’s risk understanding tools is critical to turning the tide against disaster and pave the way for a safer, more secure world.