Catastrophe bond
A catastrophe bond (cat bond) is a risk-transfer financial instrument that allows governments or insurers to transfer disaster risk to capital market investors. If a specified disaster event occurs, the bond’s principal is used to provide funds for recovery; if no event occurs, investors receive interest payments and their principal back.
This working paper presents a framework that compares contingent loans, grants from multilateral development banks, catastrophe bonds, and insurance provided through regional risk pools.
Read moreVulnerability
Conditions that increase how severely people or communities are affected by hazards.
International crisis financing system
The network of global organisations funding crisis prevention, preparedness and response.
Shock-responsive social protection
Social protection systems adapted to scale quickly when large shocks affect many people.
Development bank
A public financial institution providing loans, grants and expertise to support development goals.
Social protection
Policies and programmes designed to reduce and prevent poverty and vulnerability throughout the life cycle.
Pre-arranged financing
Financing approved before crises that is released automatically when agreed triggers are met.
