Cost-Effective Pre-arranged Disaster Financing
A GAD actuary has co-authored a guidance note to help countries and organisations assess value for money when using pre-arranged financing for disasters.
Countries and organisations seek to set up financing ahead of disasters. This involves understanding which solution or product presents the best value for money (VfM).
The report Assessing value for money in pre-arranged financing for disasters: a practical framework has been published by the Centre for Disaster Protection and co-written by a GAD actuary.
Preparing for disasters
This guidance note has been developed to help countries and organisations considering or using pre-arranged financing instruments through the process of assessing if a particular instrument or combination of instruments offers the best value for money.
Pre-arranged financing (PAF) is set up before a disaster and involves committing funding and preparing response plans before disasters occur. As financing is in place before a disaster, it ensures funding is available to reach affected people once an event occurs.
Assessing value for money
The report is drawn from the work of the Centre for Disaster Protection over the past 5 years, and is aimed at organisations or countries which are looking to:
- set up new PAF instruments
- improve the design of existing PAF instruments
- understand the optimal combination of financial instruments needed to manage the risks they face
The report provides an overview of VfM analysis. It shows how it is a useful tool to inform decision making and demonstrate the potential effectiveness of new financial approaches compared to existing methods of financing disaster response. The report also presents a flexible 7-step framework for approaching VfM analysis in this context, supplemented by case studies and examples.
Who’s it for?
The research sets out which organisations may benefit from undertaking VfM assessments in relation to PAF. They include:
- national governments
- donor agencies
- humanitarian agencies and NGOs
- risk finance providers
- multilateral development banks / multi-donor funds
Process and content
GAD’s Head of Climate and Disaster Risk Georgi Bedenham co-authored the report. She said: “We developed a 7-step framework to encourage governments and organisations to consider a range of aspects of VfM. It is intended as a guide to support anyone designing, commissioning and conducting VfM assessments.
“We have also provided a useful set of guiding questions at each stage to help the reader work their way through the process.”
https://www.gov.uk/government/news/value-for-money-in-pre-arranged-financing-for-disasters