ADB launches disaster risk financing project for Hue city

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The project has a total investment of US$2 million sourced from the Urban Climate Change Resilience Trust Fund (UCCRTF) managed by the ADB.

Disaster risk financing (DRF) helps prepare the financial sources before loss events occur, thus helping to minimize the impactson capital flows. These grants are flexible and can be adjusted to suit the features of disasters and the characteristics of risks. DRF tools often include savings, funds, credit, contingent credit, insurance, public debt and budget allocations. Each tool has its own strength and weakness, and is often used together. Some activities occur before the event and some occur after the incident.

Vice Chairman of the provincial People’s Committee Nguyen Van Phuong said ADB is one of the leading units in supporting Thua Thien-Hue to minimise natural disaster risks in recent years.

He mentioned other assistance project of the bank such as biodiversity conservation, climate change adaptation and sustainable forest management, and green urban development.

The objective of project is to ensure cost effective coverage. It is necessary to understand the characteristics of risky public assets, the capability of the local insurance market, the legal environment on insurance and the perception of decision makers of state agencies about the value and applicability of insurance.

The project consists of four major contents, including mapping and analyzing high-risk and high-value public assets; researching the feasibility of disaster insurance in Viet Nam and in Hue city; designing appropriate disaster insurance structures to provide large-scale cost effective coverage; and developing capabilities and disseminating relevant knowledge to decision makers.

Thomas W.Kessler, Principal Disaster Risk Insurance & Finance Specialist at the bank, said disaster risks in Viet Nam are estimated to cause direct losses of averagely US$1.4 billion every year.

By Vien Nhu