Ghesquiere, FrancisMahul, Olivier2012-03-192012-03-192010-09-01https://hdl.handle.net/10986/3912This paper has been prepared for policy makers interested in establishing or strengthening financial strategies to increase the financial response capacity of governments of developing countries in the aftermath of natural disasters, while protecting their long-term fiscal balances. It analyzes various aspects of emergency financing, including the types of instruments available, their relative costs and disbursement speeds, and how these can be combined to provide cost-effective financing for the different phases that follow a disaster. The paper explains why governments are usually better served by retaining most of their natural disaster risk while using risk transfer mechanisms to manage the excess volatility of their budgets or access immediate liquidity after a disaster. Finally, it discusses innovative approaches to disaster risk financing and provides examples of strategies that developing countries have implemented in recent years.CC BY 3.0 IGOACCOUNTINGASSET BASEATLANTIC HURRICANESAUDITSAUTOMOBILE INSURANCEBANK POLICYBANKSBONDBOND ISSUANCESBOND ISSUEBOND ISSUERBOND MARKETBONDSBORROWING CAPACITYBUILDING CODESBUSINESS INTERRUPTION INSURANCECALL OPTIONCAPITAL EXPENDITURESCAPITAL MARKET DEVELOPMENTCATASTROPHE BONDSCATASTROPHESCATASTROPHIC EVENTCAUSE OF DISASTERSCLIMATE CHANGECOMMODITY PRICECONTINGENT DEBTCONTINGENT LIABILITIESCONTINGENT LIABILITYCOST OF CAPITALCOVERAGECREDCREDIT RATINGCURRENCYCURRENCY RISKDEBT INSTRUMENTSDEBT LEVELSDEBT OBLIGATIONSDEBT RATIOSDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPMENT BANKDEVELOPMENT NETWORKDISASTER EMERGENCIESDISASTER EVENTSDISASTER INSURANCEDISASTER MANAGEMENTDISASTER RECOVERYDISASTER REDUCTIONDISASTER RESPONSEDISASTER RISKDISASTER SIMULATIONDISBURSEMENTDOMESTIC CREDITEARTHQUAKEEARTHQUAKE INSURANCEEARTHQUAKESEMERGENCIESEMERGENCY ASSISTANCEEMERGENCY FINANCINGEMERGENCY RELIEFEMERGENCY SERVICESEMERGING ECONOMIESENVIRONMENTAL DEGRADATIONEXPENDITURESFIDUCIARYFINANCE MINISTRIESFINANCESFINANCIAL CRISISFINANCIAL EXPOSUREFINANCIAL INSTITUTIONSFINANCIAL INSTRUMENTFINANCIAL INSTRUMENTSFINANCIAL RISKFISCAL POLICYFLOODFLOODSFUNGIBLEGLOBAL CAPITALGLOBAL CAPITAL MARKETGOVERNMENT BUDGETGOVERNMENT EXPENDITURESGOVERNMENT FINANCESGOVERNMENT INTERVENTIONGOVERNMENT INVOLVEMENTGOVERNMENT POLICIESHOUSINGHURRICANEHURRICANESIMPACT OF DISASTERIMPACT OF DISASTERSINDEBTEDNESSINDEMNITYINSECT INFESTATIONSINSTRUMENTINSURANCEINSURANCE COMPANIESINSURANCE COMPANYINSURANCE INDUSTRYINSURANCE MARKETINSURANCE MARKETSINSURANCE PENETRATIONINSURANCE PRODUCTINSURERINSURERSINTEREST RATEINTEREST RATESINTERNATIONAL BANKINTERNATIONAL CAPITALINTERNATIONAL CAPITAL MARKETSINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL MARKETSINTERNATIONAL STANDARDSISSUANCELAWSLEGAL FRAMEWORKLEGISLATIONLIMITED BORROWING CAPACITYLINE OF CREDITLINES OF CREDITLIQUIDITYLOANMATURITYMINISTRIES OF FINANCEMORAL HAZARDMORAL OBLIGATIONMULTILATERAL DEVELOPMENT BANKSNATURAL DISASTERNATURAL DISASTERSNET SAVINGSNEUTRALITYOPPORTUNITY COSTPAYMENT SYSTEMSPOLICYHOLDERSPORTFOLIOPRESENT VALUEPRICE RISKPRINCIPAL PAYMENTSPRIVATE INSURANCEPRIVATE PROPERTYPROGRAMSPROPERTY INSURANCEPUBLIC ASSETSPUBLIC DEBTPUBLIC FINANCEPUBLIC FINANCESPUBLIC INSURANCEPUBLIC INVESTMENTPUBLIC SERVICESRECONSTRUCTIONRECOVERY OPERATIONSREGULATORY FRAMEWORKREINSURANCEREINSURERREINSURERSRELIEF OPERATIONSRESERVERESERVE FUNDRESERVESRESOURCE MOBILIZATIONRETURNRETURNSRISK CAPITALRISK INSURANCERISK MANAGEMENTRISK MITIGATIONRISK NEUTRALRISK PROFILERISK REDUCTIONRISK TRANSFERSAVINGSSECURITIESSOVEREIGN RISKSTORMTAXTREASURYTREASURY BONDSTROPICAL CYCLONETSUNAMIURBANIZATIONWEATHER DERIVATIVESWorld Bank10.1596/1813-9450-5429