Disaster risk financing as part of a comprehensive disaster risk management framework can be an effective tool in mitigating the effects of natural disasters.
World Bank Disaster
GFDRR Disaster Risk
In the News
Tonga to Receive US $1.27 Million Payout for Cyclone Response
Jan. 23, 2014
Uruguay uses weather derivative to protect itself from drought and oil price volatility
Mexico is among the countries better prepared to deal with natural disasters (CNNEXPANSION)
Sept. 19, 2013
An efficient strategy to prevent and manage disaster risks in Mexico Nov. 20, 2012
Is Mexico ready for its next big storm or earthquake?
Nov. 4, 2012
Mexico Launches Second Catastrophe Bond to Provide Coverage Against Earthquakes and Hurricanes
Oct. 12, 2012
Sendai Dialogue Advances Global Consensus on Disaster Risk
Oct. 10, 2012
World Bank Can Now Help Clients Manage Financial Risks Related to Geological and Meteorological Events
Oct. 5, 2012
G20 Urges Action to Counter Rising Costs from Natural Disasters
Jun. 20, 2012
So-called natural disasters
are not unpredictable
Apr. 17, 2012
Making the Philippines More Resilient to
Philippines Calls on US$500 million Cat DDO to respond to tropical storm 'Sendong'
Dec. 29, 2011
El Salvador Uses US$50 Million Cat DDO for Flood Emergency
Nov. 8, 2011
Philippines signs US$500 Million
Sept. 28, 2011
One A-Maize-ing Use of Derivatives (derivatiViews)
Sept. 26, 2011
Colombia Disburses US$150 Million Cat DDO
Dec. 28, 2010
View All News >>
IBRD offers a line of disaster risk financing for direct budget support that provides varying levels of protection depending on the type, frequency, and severity of the event.
Financial contracts based on an underlying weather index that transfer the risk to the financial markets. Payments are triggered by adverse weather events according to pre-specified conditions (e.g. levels of rainfall, seasonal temperatures, etc.). IBRD offers intermediation services for index-based weather derivatives to both middle- and low-income countries.
The Catastrophe Deferred Drawdown Option or Cat DDO provides countries with immediate access to financing following a natural disaster and the declaration of a state of emergency. Countries must have a disaster risk management framework in place.
Transfer the risk of a natural disaster to investors by allowing the issuer to not repay the bond principal if a major natural disaster occurs. IBRD has developed the MultiCat Program - a bond issuance platform - that transfers diversified risk to private investors.