Disaster risk finance: A toolkit

The purpose of this disaster risk toolkit is to provide practical guidance on how to choose which disaster risk finance instruments for which circumstance. The main audience is policymakers in developing countries who are responsible for disaster risk management, at national, regional and local levels. It is also intended to assist the development and humanitarian community who support developing country policymakers in disaster risk management and who, sometimes, either implicitly or explicitly, also hold some of the risks associated with disasters in these countries. It is structured as a series of steps that those actors who hold risk, and the partners who support them in this role, can follow to better understand, reduce and manage these risks, and finance activities accordingly. The steps are as follows: 

• Step 1: Risk audit
• Step 2: Determining disaster risk management actions
• Step 3: Understanding the dimensions of the financing need
• Step 4: Selecting disaster risk financing instruments
• Step 5: Combining disaster risk financing instruments to create a disaster risk finance strategy

To practically illustrate these steps, the final section of the paper presents a hypothetical case study of an urban environment in South East Asia and shows how these steps might be followed and the possible implications that may result.