A Restoration Insurance Service Company (RISCO) is a social enterprise that partners with local communities in conservation and restoration activities that provide flood reduction benefits. Insurance companies pay an annual fee for these services to reduce their risk exposure. While reducing climate-related risks due to flooding, RISCO-led projects can also generate and sell carbon credits to organizations interested in offsetting their greenhouse gas emissions to meet climate targets.
The first iteration of a RISCO, under development through a pilot initiative in Southeast Asia in 2022, targets coastal risk reduction through mangrove conservation and restoration in areas with high-value coastal assets. This initiative is intended to sequester carbon and reduce flooding and property damage risks. The aim is to generate revenue streams through insurance-related payments for flood-risk reduction benefits and by selling blue carbon credits.
Current or potential adaptation-relevant sector applications:
- coastal and riverine protection and management – coastal defences or flood protection barriers; river flood protection measures; and
- disaster risk reduction – early warning and observation systems.
Additional insights:
- pilot instrument, under development.
Considerations for creating a RISCO:
- RISCOs need a plan for deep engagement with local communities to develop conservation and restoration activities.
- Insurance payments require site-specific calculations of the flood reduction benefits.
- There must be insurance companies that are interested in insuring high-risk areas.
- There must be a market for the generated carbon credits, which may include ascertaining the quality of the credits.
Adapted from the following sources:
Global Innovation Lab for Climate Finance. (2021). Restoration Insurance Service Company (RISCO). https://www.climatefinancelab.org/ideas/restoration-insurance-service-company-risco/
Mazza, F. (2019, September 27). Restoration Insurance Service Company (RISCO). Climate Policy Initiative. https://www.climatepolicyinitiative.org/publication/restoration-insurance-service-company-risco/