Document Type : English paper for special issue on "climate change & insurance industry"
Authors
1 PHD of finance at SRBU chief risk and actuarial officer
2 Chairman of the Board of Directors of the Natural Disaster Fund
3 Taavon insurance
Abstract
In recent decades, the global community has witnessed a significant surge in the intensity and frequency of natural disasters, leading to catastrophic human and economic losses. Iran, situated in a region with high seismic and climatic risk, faces unique challenges in mitigating these impacts. Traditional disaster management frameworks often rely on post-disaster recovery rather than proactive risk reduction. Therefore, the development and implementation of modern financial and insurance models integrated with advanced technologies is a vital necessity. This study was conducted with the primary objective of performing a comprehensive gap analysis and prioritizing disaster risk management strategies in Iran. The research specifically emphasizes the integration of financial, technological, and governance innovations to bridge existing operational gaps. By evaluating the current infrastructure of the Natural Disaster Insurance Fund (NDIF), this study seeks to provide a roadmap for transitioning from traditional reactive paradigms to modern, resilience-based systems.
This research is descriptive-analytical, utilizing both qualitative and quantitative data. The research framework was operationalized through a self-administered questionnaire comprising 6 dimensions and 38 initial indicators. The statistical population consisted of 30 experts and specialists from the Natural Disaster Insurance Fund (NDIF), the Climate Research Center, and the International Institute of Earthquake Engineering and Seismology, selected through purposive sampling based on their expertise in insurance, disaster risk management, and modern financial instruments. In the first stage, the content validity of the questionnaire was rigorously evaluated by experts, leading to the refinement of the research tool and a reduction of the questions to 35 final indicators. To ensure internal consistency and reliability of the dimensions, Cronbach's Alpha was calculated, yielding a total value of 0.85. Furthermore, the normality of the data distribution was examined using the Kolmogorov-Smirnov test. Due to the non-normal distribution, the non-parametric Binomial Test was employed to confirm the research hypotheses and determine the suitability of the proposed dimensions. In the subsequent stage, the Full Consistency Method (FUCOM), a modern multi-criteria decision-making tool, was implemented in a Python programming environment. The FUCOM model was selected for its superior ability to manage the subjective judgments of experts with a significantly lower deviation rate compared to traditional methods such as AHP.
The empirical results from the Binomial Test confirmed all research hypotheses and proved that technological, financial, and governance dimensions are entirely appropriate and essential platforms for the evolution of natural disaster risk management in Iran. The gap analysis revealed a clear duality: while the national risk management system has reached relative maturity in conventional reactive approaches and physical/structural infrastructures, it faces "critical gaps" in modern domains. Specifically, the findings emphasize the lack of integration of advanced technologies such as Early Warning Systems (EWS) and Big Data analytics. Moreover, the financial sector faces a significant shortage in employing modern risk transfer instruments, including Catastrophe Bonds (Cat Bonds) and blockchain-based smart insurance contracts.
The use of the FUCOM model provided precise weighting for the strategic phases. Results indicated that the "pre-occurrence" or "prevention and preparedness" phase holds absolute priority with a dominant weight of 0.648. This finding serves as a scientific mandate for an immediate transition from a "reaction-oriented" (ex-post) system to a "risk-oriented" (ex-ante) framework. Among the specific indicators, "Blue Resilience and Emergency Water Supply" (C1312) emerged as the top priority with a weight of 0.096, followed by "Land Use Planning and Hazard Zoning" (C1311) with a weight of 0.083 in second place. The model demonstrated exceptional mathematical precision with a consistency rate (deviation factor) of 0.0018, confirming the reliability of these prioritizations for policy-making.
The integration of these findings led to the development of a comprehensive conceptual model for natural disaster risk management, structured based on the priorities extracted from FUCOM. This study concludes that the traditional and "passive" role of insurance and financial institutions in Iran is no longer sufficient to cope with the challenges posed by increasing natural hazards. There is a strategic necessity to redefine the functional role of the Natural Disaster Insurance Fund and other stakeholders to transform from "mere loss compensators" (passive entities) into "proactive leaders in risk governance" (active entities). This transition requires the institutionalization of technological innovations such as blockchain to guarantee transparency in payments and the utilization of Big Data for real-time risk assessment. Finally, focusing on the pre-disaster phase, as specified by the high weight in the FUCOM analysis, will not only reduce future economic liabilities but also significantly strengthen national resilience and sustainable development.
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