As actuaries working in development, my colleagues and I in the Disaster Risk Financing and Insurance Program (DRFIP) are constantly looking for innovative ways to apply actuarial science in the fight against poverty. Because the DRFIP is a fairly new initiative — it was established in 2010 to improve the financial resilience of governments, businesses and households against natural disasters — a lot of questions are still to be asked, and lessons to be learned, about helping client countries better calculate financial risk and improve programs that change lives.
That said, exciting advancements are under way, as we learn through exchanging knowledge with experts across the World Bank and partners from other sectors. For example: Once, while on mission in Nairobi, I passed a local Social Protection colleague in the corridor and struck up a conversation that quickly turned to a challenge she was facing. The government of Kenya was aiming to develop a mechanism that would enable its Hunger Safety Net Program, a cash transfer program, to scale up financial assistance to poor families in the case of drought. However, in order to do this, they needed a better understanding of the financial costs of such a mechanism. As droughts are, by their very nature, unpredictable, trying to estimate this cost in advance was a challenge.
How can actuaries best contribute to the development agenda?
My colleagues and I thrive on looking for answers to this type of question every day. While there are other actuaries, both in the Bank and across the sector, the role we are developing from a risk-financing perspective is to help client countries quantify the financial value of unknown risks and develop financial strategies to manage them.