Page - 102 - in Loss and Damage from Climate Change - Concepts, Methods and Policy Options

102 T.Schinkoet al. Fig.4.9 Conceptualising risk layering. SourceBasedonMechler et al. (2014) a layer for infrequent catastrophicevents,wherepublic and international assistance is decisive, and (iv) a very rare, high risk layer,whichwill require assistance from international climate fundingsources (seeFig.4.9). Weargue that risk layeringcanbeavaluable tool todefine theLossandDamage riskandoptionsspaceforeconomicormarket-basedlossesanddamages,whichcan bequantifiedandcosted.Employingaclimaterisklens,afocusonlossdistributions isappropriateas itprovides informationonthewhole riskspectrumandnotonlyon expected or average losses.Average annual (or expected) lossesmaydiffer greatly compared topotential lossesof lowprobability events, e.g. forBangladeshaverage losses associatedwith cyclone hazard are estimated to be around 0.5 billionUSD, while a 500year event is gauged to cause losses 40 times higher (UNISDR2015). In addition, the risk layering approach canhelp determine the increase or decrease of climate-related risks, and disentangle the increase according to the underlying driversof risk—hazard,exposureandvulnerability.Thishas important implications for theprioritisationof instrumentswithin theoptions space. Asoneexample,Fig.4.10providesresultsfromanapplicationoftherisklayering approachtothefiscalimplicationsoffloodriskinBangladesh,thedominantclimate- related risk in the country (based onMechler et al. 2014; Mechler and Bouwer 2015;Hochrainer-Stigler et al. 2016) (for amoredetaileddiscussionof the caseof Bangladesh see thechapterbyHaqueet al. 2018).Thequantitative riskassessment