Glossary

Risk transfer

When disaster risk is shifted to insurers or capital markets.

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This report offers an in-depth assessment of pre-arranged financing tools using seven key criteria for ensuring pre-arranged financing reduces the human and financial costs of disasters

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other key terms

Crisis

A situation where severe needs overwhelm local and national capacity to respond effectively.

Sustainable development

Meeting today’s needs without limiting future generations’ ability to meet theirs.

Basis risk

The gap between measured indicators and real losses causing payouts to differ from actual damage.

Total crisis financing

Development funding focused mainly on crisis prevention, preparedness and response activities.

Contingent liabilities

Possible financial obligations that only become real if specific future events occur.

Covariate shocks

Shocks affecting many households at once where losses are shared across the same community.