[Event Recap] From Insights to Action: Indonesia’s Knowledge Visit to New Zealand on Disaster Risk Finance

From November 18 to 22, 2024, the World Bank Group’s Crisis and Disaster Risk Finance team organized a knowledge visit to New Zealand for 14 senior officials from the Government of Indonesia. The delegation included officials from several Directorate Generals (DGs) at Indonesia’s Ministry of Finance, namely the Fiscal Policy Agency (BKF), the DG of State Asset Management (DJKN), the DG of Budget Financing and Risk Management (DJPPR), the DG of Budget (DJA), the DG of Fiscal Balance (DJPK) and the Indonesia Environment Fund (BPDLH), and an official from the National Agency for Disaster Management (BNPB). Given the similarities in hazard profiles of the two countries, both of which have high exposure to seismic risk, the key objective of the visit was to learn from New Zealand’s approach of managing risk, with a focus on understanding what risk management and financial protection strategies are employed by the different actors within the New Zealand Government. The ultimate objective is to enable further advancement of the Government of Indonesia to further implementation of its risk finance strategy.

Key Objectives and Focus Areas

The knowledge visit centered on key enablers essential for stronger management of risks, and securing protection for risks that cannot be managed. Participants explored legislation, policy, and governance frameworks to enhance the effectiveness of disaster risk management (DRM) and disaster risk finance (DRF), delving into regulatory structures and institutional arrangements. A strong focus was placed on data and risk analytics, emphasizing advanced modeling and analysis to better understand risks and guide pre-disaster investments. The visit also highlighted initiatives aimed at risk reduction, risk transfer, and resilience and attempt to optimize investments across. Strategic partnerships were another key point, with discussions on New Zealand’s collaborative approaches across government and the private sector.

Key Highlights of the Knowledge Visit

Government balance sheet risk management

Opening the knowledge visit sessions, the New Zealand Treasury, represented by Joseph Sant (Principal Analyst – Balance Sheet and Transactions), introduced the legislative framework for fiscal management across government. The Treasury emphasized the long-term management of debt, enabling fiscal headroom to borrow when necessary to respond to the financial, social, and economic consequences of significant shocks. The Treasury also explained how it constructed risk tolerance thresholds, set as percentages of GDP, within which layers of accessible liquidity (ideally through budget surpluses) would underpin the initial financial response to disaster events.

Risk Monitoring and Regulatory Insights
A session with the Reserve Bank of New Zealand, presented by Kerry Watt (Director, Financial Stability Assessment and Strategy), focused on regulatory roles in the insurance sector. Stress-testing methodologies and solvency standards were discussed as key tools for ensuring industry readiness to handle large-scale disaster events. These insights demonstrated how robust financial oversight supports both market stability, public trust and confidence, and disaster response capacities.

Emergency Management and Action Planning
In a session led by the National Emergency Management Agency (NEMA), Rebecca Newton (Team Leader, Operational Recovery) outlined the organizational framework for emergency management in New Zealand, and the legislative arrangements and guidance for recovery from disasters. NEMA operates as a conduit between central and local government and administers central government financial support to local government to restore local public services and emergency response capacity following significant emergencies.

Homeowner Protection and Risk Analytics
A session hosted by the Natural Hazards Commission featured insights from Tina Mitchell (Chief Executive), Scott McHardy (Head of Risk Financing), and Christian Linnell (Loss Modelling Product Lead). They discussed New Zealand’s homeowner protection scheme, including the Natural Disaster Fund, its funding mechanisms, and the critical role of risk modeling. The speakers emphasized the importance of pre-disaster investments in risk analytics, such as the GeoNet and RiskScape platforms, to inform risk transfer and disaster preparedness strategies. Participants gained valuable lessons on the integration of science, policy, and operational frameworks to enhance resilience.

Social and Community Resilience
A session with the Ministry for Social Development (MSD), led by Serena Curtis (General Manager, Pacific and Community Capability Programs) and Bede Hogan (Policy Manager), focused on New Zealand's approach to supporting vulnerable populations post-disaster. MSD’s role in assessing and distributing financial relief for communities and small-and-medium enterprises (SMEs) was highlighted, particularly through mechanisms tailored to income replacement and social protection. The speakers shared recent disaster recovery experiences and underlined the importance of early identification of vulnerable groups to facilitate timely and targeted support.

Risk Transfer for Public Assets
Representatives from the Ministry of Education, including Brian Mitchell (Group Manager, National Property Services) and Mark Willard (Principal Advisor - Engineering), showcased their managed fund arrangements for schools. They highlighted risk transfer instruments and resilience standards implemented for educational infrastructure. Similarly, Transpower’s session, led by Catherine Shaw (Chief Financial Officer) and Rutger Keijer (Head of Risk and Insurance), demonstrated how risk management for horizontal infrastructure and captive insurance are applied to protect the national electricity grid. Both sessions underscored the role of bespoke financial mechanisms in safeguarding critical public assets.

Cross-Sectoral Coordination
Jim Palmer (Independent Chair of the Greater Christchurch Partnership and former Chief Executive of Waimakariri District Council), led a discussion on local government resilience. He shared decades of experience with regional insurance schemes like Local Authority Protection Programme (LAPP) and RiskPool, emphasizing their evolution and lessons learned from major earthquakes and floods. At the metropolitan level, Sarah Houston-Eastergaard (Treasurer for Wellington City Council) highlighted risk financing strategies tailored to the city’s high natural hazard exposure. These sessions illustrated how multi-level government coordination fosters sustainable and localized DRM.

The knowledge visit ended with an action planning session facilitated by World Bank representatives to synthesize key takeaways and identify steps for adapting New Zealand’s practices to Indonesia’s State Asset Insurance Program (ABMN) and Pooling Fund Bencana (PFB).

Key Takeaways

1. Understanding Risk: Regular investment in hazard science and dynamic risk quantification is crucial for sustainable DRM and DRF.
2. System-Level Approaches: Effective DRM and DRF requires clear roles and mandates, coordinated governance, political sponsorship, and a whole-of-lifecycle approach from readiness to recovery.
3. Tailored Financial Instruments: Strategic layering of risk retention and transfer mechanisms ensures cost-effective access to contingent capital.
4. Resilience-Driven Policies: Development and monitoring of resilient building standards is an important ex-ante risk mitigation tool and supports (re)insurer confidence in New Zealand.
5. Capacity Building and Institutional Strengthening: Ongoing investments in technical capacity and institutional frameworks are essential for effective DRM and DRF implementation.

Looking Ahead
Indonesia’s knowledge visit to New Zealand offered invaluable insights into New Zealand’s DRM and DRF initiatives, informing the visiting senior officials with practical strategies to strengthen their national programs. By exploring New Zealand's system-level approaches, tailored financial mechanisms, and collaborative frameworks, the delegation gained actionable knowledge to enhance Indonesia’s State Asset Insurance Program and Pooling Fund Bencana. The visit, yet again, underscores the importance of continuous learning, cross-sectoral coordination, and investments in resilience to address the growing challenges of disaster risks effectively. This collaboration sets a strong foundation for advancing disaster preparedness and fiscal resilience in Indonesia.