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 moreEx ante
Actions, decisions or financial arrangements made before a disaster or crisis occurs.
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.
Contingent loan (or credit) and grants
A pre approved loan or grant released automatically when agreed crisis conditions or triggers are met.
Official development assistance (ODA)
Public aid supporting development and welfare in eligible countries, usually on concessional terms.
Sustainable development
Meeting today’s needs without limiting future generations’ ability to meet theirs.
