Pollner, John2012-07-312012-07-312012-07-05978-0-8213-9579-0https://hdl.handle.net/10986/9381This report addresses the large flood exposures of Central Europe and proposes efficient financial and risk transfer mechanisms to mitigate fiscal losses from natural catastrophes. In particular, the Visegrad countries (V-4) of Central Europe, namely, Poland, the Czech Republic, Hungary, and the Slovak Republic, have such tremendous potential flood damages that reliance on budgetary appropriations or even European Union (EU) funds in such circumstances becomes ineffective and does not provide needed cash funds for the quick response and recovery needed to minimize economic disruptions. The report is primarily addressed to the governments of the region, which should build into their fiscal planning the necessary contingent funding mechanisms, based on their exposures. The report is addressed to finance ministries and also to the insurance and securities regulators and the private insurance and capital markets, which may all play a role in the proposed mechanisms. An arrangement using a multi-country pool with a hazard-triggered insurance payout mechanism complemented by contingent financing is proposed, to better manage these risks and avoid major fiscal volatility and disruption.CC BY 3.0 IGOACCESS TO CAPITALACCESS TO LOANSALTERNATIVE FUNDINGAMORTIZATIONAMOUNT OF RISKASSET PORTFOLIOASSET VALUESBASIS RISKBENEFICIARYBOND FINANCINGBOND FUNDBOND INSTRUMENTBOND INSURANCEBOND INVESTORBOND ISSUERBOND RATINGBOND RETURNBOND SPREADBOND SPREADSBOND YIELDBONDHOLDERBONDHOLDERSBROKERCAPITAL MARKETCAPITAL MARKETSCAPITAL REQUIREMENTSCASH FLOWCATASTROPHE BONDCATASTROPHE BONDSCATASTROPHE COVERAGECATASTROPHE INSURANCECATASTROPHE REINSURANCECATASTROPHESCATASTROPHIC EVENTCATASTROPHIC EVENTSCATASTROPHIC LOSSCATASTROPHIC LOSSESCATASTROPHIC RISKSCENTRAL BANKCENTRAL GOVERNMENTSCLIMATECLIMATE CHANGECOMMERCIAL BANKSCONTINGENT DEBTCONTRACT DESIGNCOUNTRY RISKCOUNTRY RISKSCOUPONCOUPON INTEREST RATECOVERAGECREDCREDIT GUARANTEESCREDIT QUALITYCREDIT RISKCREDITORSCROP LOSSESCURRENCYDAMAGE ASSESSMENTSDEBTDEBT FINANCINGDEBT INSTRUMENTSDEBT LEVELSDEBT SECURITYDEFAULT RISKDISASTER EVENTDISASTER EVENTSDISASTER FINANCINGDISASTER MANAGEMENTDISASTER RECONSTRUCTIONDISASTER RESPONSEDISASTER RISKDROUGHTSEARTHQUAKEEARTHQUAKESEPIDEMIOLOGYEUROPEAN CENTRAL BANKEXCHANGE RATESEXPENDITUREEXPENDITURESEXPLOSIONEXTREME TEMPERATURESFEASIBILITYFINANCE MINISTRIESFINANCIAL COMPENSATIONFINANCIAL CRISISFINANCIAL DEVELOPMENTFINANCIAL INSTRUMENTFINANCIAL INSTRUMENTSFINANCIAL MANAGEMENTFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL MECHANISMSFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL STRUCTUREFINANCING SOURCESFIREFISCAL DEFICITSFLOODFLOOD DAMAGESFLOOD INSURANCEFLOODINGFLOODSGOVERNMENT ASSETSGOVERNMENT BUDGETGOVERNMENT EXPENDITUREGOVERNMENT EXPENDITURESGOVERNMENT REVENUEGOVERNMENT REVENUESGOVERNMENT SPENDINGGOVERNMENT SUPPORTGRACE PERIODGROSS DOMESTIC PRODUCTGUARANTEE FEEHEAVY RAINHOUSINGHURRICANEHURRICANESIMPACT OF DISASTERSINCOMEINCOME LEVELINCOME LEVELSINDEBTEDNESSINDEMNITYINDEMNITY INSURANCEINFORMATION SYSTEMINFORMATION SYSTEMSINFORMED DECISIONSINSTRUMENTINSURANCEINSURANCE CONTRACTINSURANCE COVERAGEINSURANCE INDUSTRYINSURANCE INSTRUMENTSINSURANCE MARKETINSURANCE MARKETSINSURANCE MECHANISMSINSURANCE PAYOUTINSURANCE PENETRATIONINSURANCE POLICIESINSURANCE PREMIUMINSURANCE PREMIUMSINSURANCE RESERVESINSURANCE RISKINSURANCE SECTORINSURED LOSSESINSURERINSURERSINTEREST RATEINTEREST RATE SPREADINTERNATIONAL BANKINTERNATIONAL FINANCIAL STATISTICSINVENTORYINVESTINGISSUANCELANDSLIDESLEGAL PROVISIONSLEVEL OF RISKLIQUIDITYLOANLOAN BALANCEMARKET COMPETITIONMARKET INFORMATIONMARKET INSTRUMENTMARKET INSTRUMENTSMARKET PRICINGMATURITIESMATURITYMATURITY PERIODMINISTRIES OF FINANCENATURAL CATASTROPHESNATURAL DISASTERNATURAL DISASTERSOUTPUT DECLINESPORTFOLIOPORTFOLIO DIVERSIFICATIONPORTFOLIOSPREMIUM PAYMENTPREMIUM PAYMENTSPRINCIPAL REPAYMENTPRIVATE COMMERCIAL BANKSPRIVATE INSURANCEPRIVATE PARTYPRIVATE PROPERTYPROBABILITY OF DEFAULTPUBLIC BUDGETSPUBLIC EXPENDITURESPUBLIC FINANCEPUBLIC SECTOR DEFICITSPURCHASING POWERRATE OF RETURNREINSURANCEREINSURANCE BROKERREINSURANCE CONTRACTSREINSURERSREPAYMENTSRESERVERESERVE FUNDSRESERVESRETURNRETURNSRISK ANALYSISRISK ASSESSMENTRISK EXPOSURERISK EXPOSURESRISK FACTORSRISK INSURANCERISK MANAGEMENTRISK MANAGEMENT TOOLSRISK MANAGERSRISK POOLINGRISK PREMIUMRISK TRANSFERSAVINGSSCENARIOSSECURITIESSHORT-TERM LIQUIDITYSOVEREIGN ENTITIESSTATISTICAL ANALYSISSTORMSTORMSSUBSIDIARIESSUSTAINABILITYSWAPSWAPSTRANSACTIONTROPICAL CYCLONETYPE OF DISASTERUNDERWRITINGWEATHER DERIVATIVESWEATHER EVENTSWIND STORMSWorld Bank10.1596/978-0-8213-9579-0