Understanding Climate Risks - What does it mean for San Salvador?

InsuResilience Solutions Fund

The need for climate adaptation and risk management is most pressing in low-income countries. Without rapid action climate risks will threaten development gains already achieved and affect future economic growth potential.

Climate risk modelling and analysis can provide decision-makers with the information they need to turn policies into action. These tools are already available today and can be implemented globally enabling decision makers to answer the most pressing questions they are facing today.

Results of a San Salvador case study illustrate climate risk analysis as essential instrument of comprehensive climate risk management:

25% of potential damages from flooding could be prevented by implementing the two most cost-effective physical adaptation measures.
Climate risk insurance sends a strong price signal. Risk reduction by implementing the identified adaptation measures can lower the insurance premium by 35%, thus giving a strong incentive to turn adaptation policies into action.
Additionally climate risk insurance represents an effective measure to cap future losses and provide much needed funds for post-disaster relief.

The case study reveals the complementarity of risk prevention and risk reduction. Physical adaptation investments are key to adapt to climate change. However, not all risks can be avoided. Additional financial adaptation measures such as climate risk insurance offer an effective instrument for climate risk management.

Read the full policy brief Downloadhere (PDF, 1.9 MB).