Risk Management: Climate Change and the Poor

The classical methods of quantifying risks involve estimation of probabilities and impact. For most kind of pure risks, especially natural disasters, an analysis of historic data can reveal trends that can then be extrapolated over the future years to estimate frequency of loss producing events. The financial impact a risk can inflict upon a household could be influenced by a variety of physical and economic factors surrounding the household.Hence the exact quantification of a particular risk at the household level will require collection of primary data. The impact indicator so arrived at may differ from family to family and certainly from community to community. Hence after collation of primary data, some amount of averaging or a ranging-out may become necessary to arrive at a standard level of financial impact.

This paper aims to throw some light on the quantification of risks to individual lives of the poor due to climate extremities- challenges and scope for financial incentives and solutions.