Financial Disaster Risk Management (FDRM)
A recovery lending response requires both “liquidity” by way of rapid debt funding that can be repaid after the response is complete and “capital” to fund both client support such as grace periods and to ensure the balance sheet remains solid. We have completed sophisticated modelling of a Financial Disaster Risk Management (FDRM) scheme that combines climate science, weather index derivative/insurance and liquidity funds to create an assured financing mechanism for our recovery lending.
The scheme is currently in development with our partners GlobalAgRisk supported by grants from the UK government (DFID), the Rockefeller Foundation, FMO (the Dutch development bank) and the Asian Development Bank (supported by a fund from the Government of Canada). The detailed design of this FDRM solution is to be complete by September 2016 and rolled out to at least 11 VisionFund countries representing 70% of our portfolio during the following year.