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Climate risk insurance: the missing links

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Pakistan is bearing the severe outcomes of droughts, floods, and heat waves, consistently keeping it among the most vulnerable countries to climate change.

Recently, Climate Risk Index 2025, ranked Pakistan as the most affected country globally for the year 2022, underscoring its vulnerability to the growing incidence and intensity of climate-brought catastrophes.

The colossal floods in 2010 and more recently in 2022 were among the most disastrous. These floods were not mere abnormalities; they were enlarged and intensified due to climatic shifts.

The inundations in 2022 were catastrophic predominantly, plunging nearly 30% of the country with estimated economic losses of around $ 15.2 billion. The scale of destruction was beyond any comparison.

This sole event ruined the livelihoods, swept away the critical infrastructure, and left an abysmal scar on an already fragile economy.

The consequences extend beyond the instant damages as these destructions destabilise food security, the well-being of millions, and most importantly long-term economic stability.

Increasing disasters highlight the critical need to manage the disaster risk particularly due to floods. Flood risk management is approached in two ways.

The first approach centers on “hard solutions”. Hard solutions signify large-scale infrastructure projects such as building dams, levees, and flood barriers. These measures can effectively lessen risks in the long term, but they come with some downsides. Firstly, these projects necessitate huge financial capital.

Secondly, prolonged timeframes are required to implement these projects. For a developing country like Pakistan where economic stability is a serious constraint, both of them are colossal challenges. Therefore, while hard........

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