Fostering Stability through Financial Preparedness: Disaster Risk Finance in Fragile, Conflict, and Violence-Affected Environments

In contexts affected by Fragility, Conflict, and Violence (FCV), vulnerability to shocks is acute, with typically low resilience of institutions, communities, and households. Sixty percent of the 25 most climate-vulnerable countries also feature on the World Bank list of fragile and conflict-affected situations (FCS); people in FCS are three times as likely to be affected by extreme weather annually compared to others. The high exposure and low resilience to shocks combine to have profound long-term impacts on FCS economies, with estimated cumulative GDP losses reaching 4% three years after a significant climate event, compared to 1% in other countries. Supporting communities and businesses to cope with climate and disaster shocks in these contexts can be challenging due to instability, access restrictions, weak institutional capacity, including lacking institutional frameworks for transparent and reliable financial transactions.

When considering disaster risk finance (DRF) in FCV contexts, it is essential to understand that one size will not fit all. While commonalities exist, such as general vulnerability to shocks, FCV countries differ significantly.