Action 1: 
Measure what we value

The world is not on track to reduce risk. The costs of disasters are increasing in both social and economic terms, threatening sustainable development (GAR2022, Chapters 2 and 3). Balance sheets ignore key variables, particularly undervaluing climate change risk, costs to ecosystems and the positive social benefits of risk reduction. The real costs of extensive risk are especially undervalued, and this gap is widening as major climate change impacts such as sea-level rise gather pace. To help measure what we value, key actions are to:

1.1 Rework financial systems to account for the real costs of risk, particularly long-term risks, and rework investment and insurance systems to incentivize risk reduction

Governments and the financial industry urgently need to improve how they account for the extent of financial assets at risk under various future climate change scenarios. Social and environmental impact assessments undertaken during the initiation of projects need to be extended to include regular reporting by the public sector, major companies, investments and pension funds. Risk myopia means there are few safe options offered for risk-resilient investments. Just as green bonds helped accelerate the finance of renewable energy, similar financial products are needed to incentivize and ease investment that is resilient to disaster risk and climate change.

1.2 Adapt national fiscal planning and risk financing to consider risk and uncertainty

Public sector finance “stress-testing” methodologies need to be extended to learn from the COVID-19 pandemic, and to test for a wider range of systemic risks with potentially cascading impacts. National budgets also need to evolve to include risk and uncertainty components, so financial planners can become more adept at adaptive planning and are better able to pivot resources in crisis situations.

Action 2: 
Design systems to factor in how human minds make decisions about risk

Policymakers and providers of disaster risk reduction products and services to households and communities continue to undervalue how risk perceptions, including cognitive biases, influence decision-making. To help design systems that factor in how human minds make decisions about risk, key actions are to:

2.1 Recognize the role of people’s perceptions of risk and biases to close the gap between intention and action in reducing risk

Adjusting how insurance products are marketed can have a transformative impact on ensuring risk-resilient investment. This includes reframing risk approaches such as using “opt-out” rather than “opt-in” schemes for flood insurance (GAR2022, Chapters 8 and 11).

Improving codes and standards, and also the communication around why they are necessary, is key. For example, after the 2010 earthquake and tsunami, the Government of Chile helped incentivize safe construction by providing funds to poor families to cover the cost of “half a good house” that adhered to building code, but which also allowed personalization of homes by owners (GAR2022, Chapter 4).

2.2 Recognize the value of risk analytics as a tool but not a panacea

Lessons learned from the COVID-19 pandemic show that the success rates of models were uneven in predicting the spread of the disease within and among countries. Decision makers went from an over-reliance on models to extreme scepticism about their utility. Modelling tools can help people think about things in a better way, but they cannot predict the future with granular accuracy. No models are 100% reliable. However, they are essential tools as long as the people who interpret them do not have unrealistic expectations of their omnipotence or dismiss them. Governments can, and should, invest in data analytics, but only if quality models and big data use are combined with methods to draw on local knowledge, community feedback and expert opinion.

Action 3: 
Reconfigure governance and financial systems to work across silos and design in consultation with affected people

Governance and financial systems are not yet embracing transdisciplinary approaches and tend to take top-down approaches. To help reconfigure governance and financial systems to work across silos, and design in consultation with affected people, key actions are to:

3.1 Embrace a new “risk language” that cuts across multiple disciplines

Disaster risk management actors and other sectors speak differently about risk and too often operate in sectoral silos. There is a need to look more at systems, not individual hazards, and to work across disciplines. This requires increased efforts to create common terminologies and provide open access data across disciplines to create shared knowledge, encourage lateral collaboration and speed up the pace of learning. Disaster risk modellers have been learning from tools developed to measure cascading effects during the last financial crisis and from enterprise risk management approaches.

But this learning needs to go both ways between governments and communities, and be built into planning and budgeting processes (GAR2022, Chapter 11).

At the global level, initiatives such as the UNDRR and International Science Council joint Hazard Definition and Classification Review, the new Centre of Excellence for Climate and Disaster Resilience established by UNDRR and the World Meteorological Organization (GAR2022, Chapter 1) and similar inter-agency collaborations that upgrade disaster damage and loss reporting are helping to increase the interoperability and utility of data systems. Such efforts need to be supported to enable enhanced risk understanding at a global level.

3.2 Step up participation, transparency and citizen dialogue in risk decision-making to accelerate learning and necessary adjustments

Modern technology provides opportunities to accelerate learning and to quickly pick up signals essential for effective risk management in an uncertain future. But acting on these signals requires nuanced forms of communication with the public, and particularly better communication with higher-risk groups. Enhanced social protection systems targeted towards at-risk groups can be a good vehicle for better understanding who is most vulnerable to emerging risks and for ensuring effective anticipatory action to prevent acute humanitarian crises.

3.3 Enhance multi-scale risk management

Rifts can emerge between the national and local levels during major crises, as was the case in many jurisdictions during the COVID-19 crisis. Autonomy for local-level action is essential.

More emphasis is required in scenario planning to manage extensive disasters and to handle governance issues resulting from cascading impacts. For example, adjustments made to health systems based on local knowledge and feedback were essential to building trust during the 2014 Ebola outbreak in Liberia (GAR2022, Chapter 7). In Canada, an InterSectoral Flood Network of Quebec presents modelling data and also explicitly facilitates co-training among members to promote a vision that is systemic and intersectoral, engaging universities and various socioeconomic partners and disciplines (GAR2022, Chapter 10).