Basis risk
Basis risk is the difference between an index and the shock that the index is supposed to be a proxy for. A payout triggered by an index may be higher or lower than the beneficiary's losses, leading to overpayment or shortfall respectively. Where there are differences of opinion amongst stakeholders over what the index is supposed to be a proxy for, the precise definition of basis risk can be contested. For example, disagreement may arise over whether an agricultural insurance product that uses a rainfall-based index covers drought-induced crop disease and pest damage (Centre for Disaster Protection).
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This technical brief, authored by CERDI and supported by the Centre for Disaster Protection, provides an in-depth analysis of flood risk in Chad.
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This insight paper examines the challenge of handling basis risk in disaster risk financing systems.
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This report lays out a vision for new systems of financing to respond to the changing nature of global refugee crises.
Read moreAttachment point
The loss level above which a reinsurer begins paying under a reinsurance agreement.
Development bank
A public financial institution providing loans, grants and expertise to support development goals.
Risk retention
When governments retain and finance disaster costs themselves.
Hazard
A natural or human process that can cause injury, damage or disruption.
Climate resilient debt clause or 'debt pause clause'
A provision in sovereign debt contracts that enables the borrower to temporarily stop repaying debt service for a pre-agreed period when a predefined event occurs.
Disaster risk finance diagnostic
An analytical assessment of a country’s disaster risk profile.
