Events such as floods, earthquakes, hurricanes, and droughts are infrequent, but wreak severe consequences on individual lives, property, and whole economies. Reducing countries’ exposures to catastrophe risk requires careful management and often requires offshore risk transfer, to ensure that sufficient liquidity exists after a disaster, and that risk transfer and funding mechanisms are ready to speed economic recovery and reduce government fiscal exposure. By improving the management of catastrophe risk, countries can improve allocation of risk in the economy, thus contributing to higher economic growth and better risk mitigation.

Unfortunately, most developing economies face serious challenges to building effective risk transfer mechanisms. Countries suffer from a lack of risk-awareness among leadership and among the population; undeveloped insurance sectors; excessive reliance on the government as the reinsurer-of-last-resort; low incomes; uncertainty or poor information about expected economic losses from natural disasters; high distribution costs; and lack of public/private trust.

To serve countries that face these risks, the World Bank is pleased to announce an important new product—natural disaster insurance. The World Bank is committed to delivering this new risk transfer product to clients, and to increasing knowledge about natural disaster risk. In this context, the Bank is organizing a conference to address “Financing the Risks of Natural Disasters: A New Perspective on Country Risk Management.” The conference aims to address the management of catastrophe risk emanating from natural disasters at the country level. Using case studies from the recent World Bank projects in the area of catastrophe risk management, the conference will examine the applicability of modern corporate risk management techniques to countries and will discuss the fiscal and economic rationale for such policies. In particular, the conference will cover such areas of catastrophe risk management as:

• Country risk assessments;
  

• Available risk reduction and risk transfer solutions; and
  

• Institutional arrangements for national catastrophe risk management.
  

As part of these broader discussions, the conference will also focus on the latest techniques in catastrophe risk modeling, loss assessments and pricing, developments in reinsurance and alternative risk markets, and the existing and future World Bank initiatives in funding catastrophe insurance risks.