Financial Protection Against Natural Disasters: From Products to Strategies. An Operational Framework for Disaster Risk Financing and Insurance

Disaster risk financing and insurance helps minimize the cost and optimize the timing of meeting post-disaster funding needs without compromising development goals, fiscal stability, or wellbeing. It promotes comprehensive financial protection strategies to ensure that governments, homeowners, small and medium-sized enterprises, agricultural producers, and the most vulnerable populations can meet post-disaster funding needs as they arrive. 

Disaster risk financing and insurance is an integral part of disaster and climate risk management. The financial impact of disasters is best managed when integrated into holistic risk management practices. It complements disaster risk management activities by securing adequate financial resources to cover residual risks that cannot be mitigated and by creating the right financial incentives to invest in risk reduction and prevention. By quantifying the financial and fiscal impact of risk, it elevates risk management within the ministries that control public investment.