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 moreCrisis
A situation where severe needs overwhelm local and national capacity to respond effectively.
Ex ante
Actions, decisions or financial arrangements made before a disaster or crisis occurs.
Index
A measurable indicator used to estimate losses and trigger financial payouts.
Disaster risk financing
Financial arrangements made in advance to pay for disaster prevention, response and recovery.
Anticipatory Action
Actions taken before a crisis hits to prevent or reduce potential disaster impacts prior to a shock or before acute impacts are felt.
Official development assistance (ODA)
Public aid supporting development and welfare in eligible countries, usually on concessional terms.
