The Global Risk Financing Facility (GRiF): Supporting Early Action to Climate Shocks, Disasters and Crises
The Global Risk Financing Facility (GRiF) is a Multi-Donor Trust Fund (MDTF) that enables early action after climate shocks, disasters and crises by establishing new or scaling up existing pre-arranged risk-financing instruments connected to preagreed interventions. The GRiF was launched in October 2018 by the World Bank Group in partnership with the governments of Germany and the United Kingdom. It became fully operational in 2019 and already supports one global and four country projects worldwide.
In 2019, the GRiF went from concept to implementation. Building on contributions of USD 200 million pledged by the German Federal Ministry for Economic Cooperation and Development (BMZ) and the UK Department for International Development (DFID), the GRiF is already supporting investment projects in Malawi, Jamaica, Sierra Leone and Mozambique, and conducting global work on Crisis Risk Financing.
The GRiF provides technical assistance and makes investments in risk-financing instruments, including premium financing, start-up costs, capitalization and global public goods to governments. It aims to establish disaster risk financing and insurance mechanisms that can help governments have the funds in place to respond rapidly to shocks. The GRiF also aims to create incentives for disaster prevention, preparedness, response and resilient reconstruction. It will work towards sectoral integration with a focus on infrastructure, for example the set-up of pre-arranged finance for post-disaster maintenance of critical infrastructure.
Civil society organizations are key stakeholders in the design and implementation of GRiF activities. The GRiF aims to build on participatory approaches in the preparation of all investments and incorporate dimensions of gender, disability, age, and other social vulnerabilities as appropriate, while designing financial instruments. GRiF will seek to work with and support operational civil society organizations (CSO). This work is already ongoing through collaboration with the Start Network.
Strong collaboration with the private sector is equally key to achieve the GRiF objectives. The GRiF aims to harness sustainable private-sector solutions for risk financing. This includes building on ongoing technical collaboration with the Insurance Development Forum (IDF). The GRiF seeks to crowd in sustainable private-sector solutions that limit public debt and disaster-related contingent liabilities of governments.
The GRiF is co-managed by the Disaster Risk Financing and Insurance Program (DRFIP) and the Global Facility for Disaster Reduction and Recovery (GFDRR). Over the coming years, the GRiF will provide financing to set up innovative financial mechanisms that can help channel money to people affected by disasters when they need it.
Contribution by Sumati Rajput And Rui Xu (Gfdrr, The World Bank)