Financing for

(Systemic) Disaster
Risk Reduction
Syamsul Ardiansyah
Dompet Dhuafa | Coordinator WG SDGs-Humanitarian of
the C20
Premises: Disaster Risk Reduction is a Good
Investment
Investing in risk reduction and building resilience
saves more lives and livelihoods - it also brings a
good return on investment.
Every US$1 invested in risk reduction and
prevention can save up to US$15 in post disaster
recovery. (UNDRR)
Every US$1 invested in making infrastructure
disaster-resilient saves US$4 through fewer
disruptions and reduced economic impacts. (World
Bank).
Spending US$800 million on early-warning system
in developing countries would avoid losses of
between US$3 billion and US$16 billion per year.
(GCA)
 Sendai Framework for Disaster Risk
Cycle of resilience Reduction 2015-2030
EMDAT. 2021 Year in Disaster
Over past two years, many countries in the Asia and the Pacific have
strengthened their resilience against numerous natural calamities. Fewer
people are dying as a result of natural hazards as countries have been devising
more robust systems of early warning and responsive protection.
But there is still a lot to be done. Most countries are still ill-
prepared for multiple overlapping crises.
The pandemic, combined with the persistent reality of climate change, has
reshaped and expanded the Asia-Pacific riskscape. If the region is to achieve
the goals of the 2030 Agenda for Sustainable Development, particularly Goal 1,
Goal 9, Goal 11 and Goal 13, a hazard-by-hazard approach to disaster risk
management is no longer viable.
UNESCAP. “Resilience in the Riskier World, Managing Systemic Risk from Biological and other Natural Hazards, Asia Pacific
Disaster Report 2021.
 Economic Losses (US$
billion by disaster type:
2021 compared to the 2001-
2020 annual average:

153.8 < 252.1

2001-2020 In 2021

Source: EMDAT Report. 2021 Year in Disaster.

Risk Reduction – A Journey through time and space

Systemic risks emerge from the interactions of climate

change and natural hazards, with the complex,
interdependent and interconnected networks of social,
technical, environmental, and economic systems.
These risks are not necessarily obvious using traditional
hazard-by-hazard risk assessments and revealing them requires
an understanding of the degree of magnitude of failure across
these systems that could suddenly or gradually exceed society’s
capacity to cope.
‘Ultimately, the behaviour of these networks determines
exposure and vulnerability at all scales’
Source: United Nations Global Assessment Report 2019
Systemic Risk Reduction: Framework

Evolving risk
management
standards, guidelines
and methods

Systemic Disaster
Risk Principles
ADB: “Conceptualizing Disaster Risk
Reduction Finance”
Disaster risk reduction finance through investment projects – Funding is secured for the planning
and implementation of a concrete disaster risk reduction measure (which can include both structural and
nonstructural features). The advantage of a stand-alone disaster risk reduction project lies in its
specificity, which allows to link the funding to clear implementable measures over a defined time frame.
It can, therefore, be a good option in contexts, where the institutionalization of disaster risk reduction or
disaster risk management is still limited.
ADB’s Integrated Disaster Risk Management Fund

Disaster risk reduction finance through dedicated funds - A second option for financing disaster risk
reduction is through a dedicated fund. This allows different departments or government entities (at
national and subnational levels) to apply for and/or be allocated specific resources from the dedicated
fund based on a set of eligibility criteria.
Mexico’s Natural Disaster Prevention Fund, National Resilience Taskforce within the Government of Australia’s Department of Home
Affairs

Disaster risk reduction finance through budget line - A third option is the funding of disaster risk
reduction as a budget line within sector department budgets (footnote 17). The budget line may be
served directly through allocation from the national government and/or through mandatory
contributions or policy-directed allocations by the concerned departments. As a dedicated budget line,
disaster risk reduction would have to meet specific requirements or match defined criteria for spending,
and form part of a department’s works program or resource envelope for further distribution to
recipients (e.g., local governments or regional development agencies, private sector entities, or
households)
the Philippines’ National Disaster Risk Reduction and Management Framework, Costa Rica’s National Risk Management
Financing for DRR
The UN has set a target for donor countries to spend 0.7 percent of their Gross National Income
(GNI) on Official Development Assistance. However, since 2010, ODA disbursement have averaged
at around 0.39 percent of GNI.
Between 2010-2019 show that pf a total of US$1.17 trillion of overall aid, only 11 percent (US$133
billion) was disaster related. Of this US$ 133 billion, just US$5.5 billion was allocated for disaster
prevention and preparedness, while US$ 119.8 million was earmarked for emergency/disaster
response and US$7.7 billion for reconstruction, relief and rehabilitation.

UNDRR. 2021. International Cooperation in Disaster Risk Reduction

 2015 | 2021 2020 | 2021
F-1: Total official international support, (official
development assistance (ODA) plus other official
- 97.38% -88.12%
flows), for national disaster risk reduction
actions [Received (USD)]
F-2: Total official international support (ODA plus
other official flows) for national disaster risk
- 79.21% -69.17%
reduction actions provided by multilateral See https://sendaimonitor.undrr.org/analytics/global-target/17/7
agencies [Received (USD)]

Official Development Assistance to

support disaster risk reduction has
significantly decreased.
Humanitarian Financing Gap!
What about remittances?
Bear in mind!
It is also important to reduce the transfer
costs of migrant workers’ remittances
and create opportunities for development-oriented
investments, including housing.
Article 18 Monterrey Consensus on Financing for
Development 2003.
Remittances have become significant private financial
resources for households in countries of origin of
migration. Remittances cannot be considered as a
substitute for foreign direct investment, ODA, debt
relief or other public sources of finance for
development. They are typically wages transferred to
families, mainly to meet part of the needs of the
recipient households.
Article 29 of Doha Declaration on Financing for
Development. 2008
Catatan tentang “Pooled Fund
Bencana” Indonesia
Pemerintah Indonesia, melalui Kementerian Keuangan
mulai merancang konsep Pooling Fund Bencana (PFB).
Konsep ini merupakan follow up dari Kebijakan Strategi
Pembiayaan dan Asuransi Bencana yang sudah
diluncurkan sejak 2018 oleh Wakil Presiden Jusuf Kalla.
PFB akan mengelola dana yang berasal dari APBN, APBD,
dan sumber lainnya yang sah seperti hibah, dana perwalian,
dan yang lainnya untuk membiayai kegiatan
penanggulangan bencana, baik bencana alam maupun non
alam, dan untuk semua tahapan bencana mulai dari
prabencana, darurat bencana, hingga pascabencana.
PFB juga dirancang untuk dapat melakukan kegiatan
transfer risiko dengan melakukan asuransi aset negara.
Recommendations
Meet ODA commitments: The international community needs to meet the target of 0.7 per cent of GNI for ODA that was
originally conceived as a minimum commitment to developing countries and following the Principles Paris Declaration
2005 on Aid Effectiveness and the Grand Bargain Framework 2.0 (flexible, predictable, multi-year, and adequate
funding for resilience).
Balance the composition of assistance: While increasing ODA commitments, it is important to ensure financing is spread
evenly across the spectrum from development to disaster response and prevention.
Increase and sustain funding for prevention: Consistency in funding for risk prevention and risk-sensitive investment is
crucial to build long-term resilience in the face of major planetary emergencies, including the COVID-19 pandemic, the
climate emergency and wholesale destruction of the environment.
Improve understanding of national financing for disaster risk reduction. This include taxation and (shock-responsive)
social protection policies as well as optimizing other alternative financial sources such remittances and philanthropy
(public/individual foundation) that consider the need and urgency of supporting the implementation of disaster risk
reduction efforts at all level (National, sub-national, local, including community level).
Debt relief and TRIPS waiver for essential commodities that support disaster risk reduction efforts, such as tsunami threat
early warning technology that is urgently needed by least developed small island countries as an effort to increase fiscal
space that can be used for investment in other DRR efforts.
“We must recognize that the nature of risk in our society has changed dramatically ….
Risk has become systemic. It cannot be divided into categories that are then assigned to
health authorities, disaster management agencies or early warning centres. If governments
continue to operate in this way, the bigger picture as a disaster unfolds will remain
unseen and the solutions will not be fit for purpose.
Mami Mizutori | Special Representative of the Secretary-General for Disaster Risk Reduction, United
Nations Office for Disaster Risk Reduction
Terima Kasih
syamsul@dompetdhuafa.org