Financing climate and disaster risk through contingency: The case of humanitarian risk pools

• Examines risk pooling, a humanitarian climate/disaster financing mechanism. • Driven by calls for more ‘risk-based’ and ‘efficient’ humanitarian funding. • In theory, enables optimisation of funding by pooling and over-committing. • Extends financialised logic of risk and contingency into humanitarian sector. • Introduces new funding complexity and fragility for beneficiaries. This paper examines the adoption of risk pooling in the humanitarian sector as an innovative climate and disaster risk financing mechanism. Risk pooling is a strategy borrowed from the insurance industry to enable a portfolio of pre-agreed funding to be over-committed, or ‘stretched’, in order to allocate funding more efficiently. Risk pooling has emerged in the context of concerns about rising humanitarian costs and is part of wider calls for more efficient, ‘risk-based’ climate and disaster financing. The paper explores humanitarian risk pooling through the lens of geographical scholarship on risk and contingency, drawing empirically from a case study of a humanitarian risk pool, to show that pooling represents the extension of financialized logics of risk into new spaces in the humanitarian sector. Risk pooling is described as offering ‘protection’ to beneficiaries, but while it offers potential efficiencies for humanitarian agencies and donors, it renders funding certainty for beneficiaries more complex and fragile. The paper explores how risk operates as a ‘hinge-point’ for decision-making through the pool, extending a logic of contingency into new domains of humanitarian financing, as agencies seek to gain efficiencies in the face of more costly, frequent and severe future climate and disaster events.