Microfinance and Disaster Risk Management: Experiences and Lessons Learned

Publication Date: Jul 2002
Published by: Provention Consortium
Document Type: Paper

View this Document   Email this Document

How can microfinance institutions manage disaster risk at the institutional level and increase the disaster risk management capacity of clients

The report reviews mechanisms for poor households and communities to manage disaster risks better by:

analysing how microfinance clients have usually dealt with disaster risk
• assessing how microfinance institutions have managed disaster risk and dealt with disasters to help clients and ensure operational continuity and sustainability
• identifying lessons learned and asking whether microfinance may contribute to disaster risk management

• gives examples of the effects of disasters and the risk exposure of microfinance clients and institutions
• discusses risk management strategies of the poor and near poor microfinance clients and analyses the role of financial services
• describes experiences of microfinance institutions and their assistance to clients in disaster risk management

• microfinance institutions facing disasters have learned the importance of keeping credit flowing; dealing with risk before the event to mitigate the impact of disasters on them and their clients and maintaining their integrity as financial entities, regardless of what type of risk management activities they decide to provide
• microfinance institutions should not become full-time disaster risk management agencies
• microfinance institutions should carefully consider where they can contribute best in disaster response to avoid taking on a role beyond their capacity or mission
• microfinance institutions, donors and government should consider the establishment of a sector-wide strategy to address disaster risk
• financial flows should remain open during a disaster, balancing between the need to maintain credit discipline and humanitarian concerns for clients
• microfinance institutions should be aware that disaster risk management is a continuous process