How Disaster Risk Finance Can Link with Social Protection: Maximizing the Effectiveness of Shock Response
Take a look at three guiding principles for linking disaster risk finance to existing methods to create shock-responsive social protection.
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Disaster risk finance (DRF) focuses on arranging finance in advance so that appropriate levels of funds will reliably get to the people who need it most, when they need it. Whilst the financial instrument to be used is important (e.g., insurance, contingent credit or contingency budgets to name a few options), it is also critical to think through how to get the money efficiently and effectively to affected communities. For this reason, DRF is best when it is linked to a pre-agreed plan of how the money should be spent. Because of this, those working in DRF are increasingly considering social protection as a means to distribute emergency support, sometimes called shock-responsive social protection (SRSP).
This brief provides some initial guidance for those wanting to deepen their understanding of SRSP from a financing perspective; it is suitable for those involved in the design or funding of DRF instruments and approaches who want to explore options of how to increase its impact and cost-effectiveness, for example, through improved contingency planning. Given spiraling needs and the rising frequency and severity of climate disasters, it is imperative to make sure that every dollar of DRF support has the maximum possible impact on the lives of vulnerable people. SRSP offers some potential to help realize that aim.
Linking Disaster Risk Finance Approaches and Social Protection
This guidance offers three “rules of thumb” for those who are interested in linking their DRF approach or instrument with social protection so that the opportunity to reach people effectively is maximized:
- Be selective: Think carefully about what to scale up.
- Be collaborative: Design the financing and the SRSP together.
- Be prepared to take baby steps: SRSP may be a longer-term goal.