Disaster Risk Financing (DRF) helps to increase the financial resilience of the national and subnational governments, businesses, households, farmers, including the most vulnerable against natural hazards by implementing sustainable and cost-effective financial protection policies and operations. An efficient Disaster Risk Financing (DRF) approach ultimately leads to fiscal resilience. Fiscal resilience is the ability to plan ahead to better manage the cost of disasters, ensure predictable and timely access to much-needed resources, and ultimately mitigate long-term fiscal impacts.
Disaster risk financing complements disaster risk reduction. DRF reduces the cost of resource mobilization in the long run and can be either aimed at disaster response or swift recovery. Therefore, it reduces the likelihood of augmenting losses due to delayed recovery as a consequence of unavailable financing options.
The DRF Unit is responsible for the achievement of one of the three outputs of the Fund, which is improved fiscal management of natural hazards risks’. To successfully achieve this output, the DRF Unit has set three targets as below:
Figure: Disaster Risk Financing