Index
In risk finance, an index is an indicator or measure that is chosen to be a good proxy for a type of shock, and used to determine payouts. For example, tropical cyclone categories used as an index for property damage or area average yield as a measure of lost agricultural production. Modelled estimates of damage costs are also used as indices (Centre for Disaster Protection).
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.
Hazard
A natural or human process that can cause injury, damage or disruption.
Risk profile
Underlying risks that an organisation or country is exposed to and the extent to which they are mitigated by pre-arranged finance.
Preparedness
Skills, systems and resources developed to respond effectively to likely future crises.
Prevention
Actions taken to avoid or reduce the impacts of future crises and hazards.
Contingent loan (or credit) and grants
A pre approved loan released automatically when agreed crisis conditions or triggers are met.
