The Asian Development Bank has come out with a report on Cambodia's disaster risk financing that also highlights the nation's vulnerabilities to natural disasters and the urgent need for robust financial mechanisms.
The report The Enabling Environment for Disaster Risk Financing in Cambodia: Country Diagnostics Assessment provides recommendations that include adopting innovative tools like catastrophe bonds, enhancing data systems and fostering public-private partnerships to build resilience.
Cambodia’s geographical and climatic conditions make it highly susceptible to natural disasters such as floods, droughts, and typhoons. These recurring calamities devastate livelihoods, agriculture, infrastructure, and the broader economy. Despite the scale of impact, the mechanisms to finance disaster response and recovery remain underdeveloped, leaving the nation heavily reliant on external assistance.
The current disaster risk financing framework in Cambodia reveals several critical shortcomings. Government budget allocations for disaster response are limited and lack integration with broader financial planning frameworks. Moreover, private sector involvement is minimal, with low penetration of insurance products for disaster-related risks. The lack of robust data systems further hampers accurate risk assessments and pricing, limiting the effectiveness of existing strategies.
The report also highlights major barriers to progress that include limited technical and institutional capacity to design and implement effective disaster financing mechanisms. Also, a weak coordination between governmental agencies and external stakeholders.
These and more challenges underscore the urgency of reforming Cambodia’s disaster risk financing ecosystem. The report also identifies promising avenues to strengthen Cambodia’s disaster risk financing capabilities.
To achieve meaningful progress, the report outlines actionable recommendations that include institutionalising disaster risk financing within national economic planning and policies; by building technical and institutional capacities to manage and deploy financial instruments effectively, and promoting public-private partnerships to leverage additional resources and expertise.
Raising awareness among communities about the importance of disaster insurance products and financial preparedness is another important recommendation. The report encourages Cambodia to adopt global best practices, particularly from neighbouring ASEAN countries, to refine its disaster risk financing strategies.