Short answer
Incorporate mechanisms for financial risk mitigation and recovery into design solutions for critical infrastructure and community planning, recognizing the prevalence of uninsured catastrophic risks.
- Field
- Innovation & Markets
- Source
- BIROn (Birkbeck, University of London) (2018)
- Method
- Literature Review and Conceptual Analysis
- Evidence
- Moderate effect
Governments are increasingly adopting market-based solutions to address the significant underinsurance of catastrophic risks, aiming to enhance societal and economic resilience. This innovation & markets research insight is drawn from a 2018 study published in BIROn (Birkbeck, University of London). Using Literature review and conceptual analysis, researchers explored how this design variable affects real-world outcomes. The key design takeaway: Incorporate mechanisms for financial risk mitigation and recovery into design solutions for critical infrastructure and community planning, recognizing the prevalence of uninsured catastrophic risks.
Bridging the Protection Gap: Innovative Market Solutions for Catastrophic Risk
Governments are increasingly adopting market-based solutions to address the significant underinsurance of catastrophic risks, aiming to enhance societal and economic resilience.
BIROn (Birkbeck, University of London) · 2018
Key Findings
- 01A significant 'protection gap' exists globally, with a large percentage of losses from natural catastrophes and other large-scale risks remaining uninsured.
- 02Governments are exploring innovative market-based solutions, termed Protection Gap Entities (PGEs), to address this gap and improve financial resilience.
- 03Bridging the protection gap is critical for both short-term post-crisis financial response and long-term reconstruction efforts.
- 04The social and economic stability of nations is directly linked to their ability to recover from disasters.
Application
Design takeaway
Incorporate mechanisms for financial risk mitigation and recovery into design solutions for critical infrastructure and community planning, recognizing the prevalence of uninsured catastrophic risks.
How to apply
When designing infrastructure or systems in disaster-prone areas, research and propose integrated solutions that consider insurance, risk pooling, or other financial mechanisms to cover potential losses.
Project actions
- 01Consider the financial implications of your design in the event of failure or disaster.
- 02Research existing insurance models or risk-sharing schemes relevant to your design context.
- 03Explore how your design could potentially integrate with or facilitate new market-based risk management solutions.
Method & Evidence
Variables
Strengths & Limitations
Strengths
- +Highlights a critical and under-addressed global issue.
- +Introduces a relevant conceptual framework (PGEs) for understanding potential solutions.
Limitations
The research is largely theoretical and doesn't provide specific blueprints for 'Protection Gap Entities' or detailed case studies of their successful implementation.
Reliability & validity
The study's reliance on existing literature and conceptual analysis means its findings are primarily theoretical. Empirical validation of the proposed 'Protection Gap Entities' and their effectiveness would require further research involving real-world case studies and quantitative data.
Think critically
To what extent can market-based solutions truly address the systemic issues that create the 'protection gap,' or are they merely a palliative measure for risks that inherently require public intervention?
Design Principles
"Design for resilience must encompass financial as well as physical robustness."
The increasing frequency and severity of natural disasters and other large-scale risks, coupled with substantial uninsured losses, highlight a critical gap in financial protection. Understanding how market mechanisms can be leveraged to cover these risks is crucial for designers and engineers involved in developing resilient infrastructure, emergency response systems, and recovery strategies.
What This Means for Your Design
Lots of disasters cause huge money losses that aren't covered by insurance. Governments are trying to find new ways, using businesses and markets, to help pay for these big unexpected costs and make communities stronger after a disaster.
How to use in your project
- 1.Reference this research when discussing the broader context of risk and resilience for your design project, particularly if your design aims to mitigate or respond to large-scale events.
- 2.Use the concept of the 'protection gap' to justify the need for specific features or strategies in your design that address financial recovery or risk transfer.
Add to My Project
Quick Cite
Paragraph starter
The increasing frequency and impact of catastrophic events, such as natural disasters, have exposed a significant 'protection gap,' where a substantial majority of economic losses remain uninsured (Jarzabkowski et al., 2018). This underinsurance poses a critical threat to societal and economic resilience, hindering post-crisis recovery. Consequently, governments are exploring innovative market-based solutions, termed Protection Gap Entities (PGEs), to address these risks and enhance financial protection. Understanding this gap is crucial for designing robust and sustainable solutions that consider not only physical integrity but also financial recovery mechanisms.
Source
BIROn (Birkbeck, University of London)
Between state and market: protection gap entities and catastrophic risk
journal · 2018
View sourceQuestions About This Research
- What does the research say about bridging the protection gap: innovative market solutions for catastrophic risk?
- Incorporate mechanisms for financial risk mitigation and recovery into design solutions for critical infrastructure and community planning, recognizing the prevalence of uninsured catastrophic risks. Evidence: BIROn (Birkbeck, University of London) (2018).
- Why does "Bridging the Protection Gap: Innovative Market Solutions for Catastrophic Risk" matter for design?
- The increasing frequency and severity of natural disasters and other large-scale risks, coupled with substantial uninsured losses, highlight a critical gap in financial protection. Understanding how market mechanisms can be leveraged to cover these risks is crucial for designers and engineers involved in developing resilient infrastructure, emergency response systems, and recovery strategies.
- How can designers apply this research?
- Incorporate mechanisms for financial risk mitigation and recovery into design solutions for critical infrastructure and community planning, recognizing the prevalence of uninsured catastrophic risks.
- What were the main findings?
- A significant 'protection gap' exists globally, with a large percentage of losses from natural catastrophes and other large-scale risks remaining uninsured.. Governments are exploring innovative market-based solutions, termed Protection Gap Entities (PGEs), to address this gap and improve financial resilience.. Bridging the protection gap is critical for both short-term post-crisis financial response and long-term reconstruction efforts.. The social and economic stability of nations is directly linked to their ability to recover from disasters.
- What research method was used?
- Literature Review and Conceptual Analysis.
- How strong is the evidence?
- Evidence strength is rated Moderate effect, based on a 2018 journal from BIROn (Birkbeck, University of London).
- What should I do differently in my next project?
- When designing infrastructure or systems in disaster-prone areas, research and propose integrated solutions that consider insurance, risk pooling, or other financial mechanisms to cover potential losses.
- What are the limitations?
- The paper focuses on the conceptualization of the protection gap and PGEs, with less emphasis on the detailed operational design or implementation challenges of specific market solutions.