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Who does what when disaster strikes, and where to find the funds to deal with its consequences? Having strategic framework is key, and we discuss it in this interview with Francisco Álvarez, Director of Investments, Concessions and Risks in the Ministry of Economy and Finance of Panama.
Why is it important to have a strategic framework for these times?
I think it is extremely important to have an orientation, a path to follow that can help determine that how one carries out a particular policy when a disaster strikes.
In the Republic of Panama, there are five thematic axes, all of which cover some aspect of what would be the financial management of disaster risk and each one contributes, in one way or another, to the strengthening of the whole. And there are several examples of how the Republic has managed to raise, especially, I believe, with the biggest event of all, which was the pandemic.
Three elements were used in the pandemic, amongst other, the CAT-DDO. The CAT-DDO we had available at that time, which is the one offered by the World Bank, was for $66 million. Out of those $66 million, $24 million had already been used in an event of drought in 2014. The remaining amount was used for the purchase of inputs to help mitigate the effects of the pandemic.
Panama has had this strategic framework in place since 2010. What are the main challenges for the implementation and operationalization of such a strategy?
One of the biggest and most important challenges is to make the general population understand what they are used for.
Then, explaining these products, which is sometimes challenging, especially with innovative products such as parametric insurance. It is a work of teaching, coordination, evaluating the products, continuing to strengthen the capacities of our technicians or technical people within our institutions, to give visibility to the importance of having these protections.
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