A. Risk Assessment
Definition
(Disaster) risk assessment is a “qualitative or quantitative approach to determine the nature and extent of disaster risks by analysing potential hazards and evaluating existing conditions of exposure and vulnerability that together could harm people, property, services, livelihoods and the environment on which they depend (United Nations General Assembly, 2016)”.
STEPS
The four components aim at answering the following key questions
Brief Description
The risk assessment examines weather-related hazards in relation to a society’s exposure and vulnerability. It enables DRM decision-making and capacity-building to be tailored to local risk profiles, which is necessary for enhancing the awareness of extreme weather events and potential action for strengthening the resilience of all stakeholders in the agricultural value chain.
The risk assessment provides the basis for developing comprehensive DRM mechanisms for all agricultural actors of all levels:
- Micro level: At local level, the agricultural value chain includes production (farmers, herders), input supply (e.g. providers of seed, fertilizer, agricultural equipment), processing (e.g. small and medium enterprises involved in drying harvest, food processing), transport, and trading (e.g. direct sales, storage, packaging).
- Meso level: The regional level stakeholders consist of aggregators such as financial institutions or agricultural business associations (e.g. coffee boards and farmers’ cooperatives at the district level).
- Macro level: The national level refers to the government or public authorities at the national through to the local levels. It is important to recognize that risk assessment of weather-related hazards can result in the prioritization of other categories of risks such as livestock/crops pest and disease, market and price. Hence it is recommended to conduct a holistic risk assessment that is cognisant of geographical localization of weather-related risks and respective impacts on specific productions or value chain processes.
Involved Actors
The national government responsible for the agricultural sector of a given country needs to determine the potentially affected actors along its value chain. Preferably, the ministry of agriculture (MoA) takes the lead and coordinates with other relevant ministries such as finance, infrastructure, housing, energy and environment, including departments dealing with climate change adaptation and national emergency offices.
The national government responsible for the agricultural sector of a given country needs to determine the potentially affected actors along its value chain. Preferably, the ministry of agriculture (MoA) takes the lead and coordinates with other relevant ministries such as finance, infrastructure, housing, energy and environment, including departments dealing with climate change adaptation and national emergency offices.
Conducting a risk assessment for weather-related events is extremely complex and requires specific technical expertise to be assigned by the MoA (e.g. geoscience experts [2] and meteorological agencies), which would also consult the affected stakeholders along the agricultural value chain (including communities and farmers). The government could benefit from data provided by the insurance industry. Especially large insurers and reinsurers, which need to understand the risks, use various approaches, methods and techniques, and could provide historical data.
[2]
For example, the PCRAFI Risk Assessment report (2013) was supported by the World Bank and ADB and conducted by a number of organizations (e.g. Applied Geoscience & Technology Division [PC/SOPAC], GNS Science, Geoscience Australia, and AIR Worldwide).
SYNERGIES: INSURANCE AND RISK ASSESSMENT
Enhanced awareness of risks
Public authorities and insurance providers can collaborate to improve the availability, reliability and accessibility of disaster risk data: governments can use insurance data for quantifying loss and damage of extreme weather events and understanding how climate- and weather-related risks are affecting households, communities, businesses and governments. They can give risk a price and raise awareness. The governments know the local conditions and can provide information and data to the insurance industry (e.g. yield data, size of the population, economic data), which are of value when developing products for potential customer groups.
At the micro level, insurance could potentially increase farmers’ sensitivity to changes in the weather and climate patterns (e.g. irregular monsoon rainfall), and help farmers enhance their awareness of weather-related risks.
Enhanced awareness of risks
Public authorities and insurance providers can collaborate to improve the availability, reliability and accessibility of disaster risk data: governments can use insurance data for quantifying loss and damage of extreme weather events and understanding how climate- and weather-related risks are affecting households, communities, businesses and governments. They can give risk a price and raise awareness. The governments know the local conditions and can provide information and data to the insurance industry (e.g. yield data, size of the population, economic data), which are of value when developing products for potential customer groups.
At the micro level, insurance could potentially increase farmers’ sensitivity to changes in the weather and climate patterns (e.g. irregular monsoon rainfall), and help farmers enhance their awareness of weather-related risks.
High-quality data for risk assessment
(Large) insurance providers publish regional and international data analyses. Governments could use insurance expertise for establishing data standards and accessing insurance-data repositories. This could enhance the speediness and quality of agricultural risk assessment.