A financial backbone for stability, not band-aids for crises

The impacts of disasters are woven into all aspects of life.

Impacts send shockwaves across all systems - essential services, infrastructure, health, education and economic. They interact with climate change, conflict, economic fragility, and inequality - amplifying risks across systems.

However, even though disaster costs are rising, financing for disaster risk reduction (DRR) is largely fragmented, short-term, and reactive.

“Let us be clear: financing disaster risk reduction is not a cost – it is an investment, with benefits across different agendas: from protecting development, to reducing humanitarian needs, and achieving climate and environmental goals.”

Kamal Kishore, Special Representative of the UN Secretary-General for Disaster Risk Reduction

To protect development gains from being eroded by a spiral of deepening crises, countries must systematically embed risk reduction in national budget processes - across all levels of government. This will require a raft of innovative financing mechanisms, public-private partnerships and novel inclusive approaches to ensure that investments provide benefits to those who need them most.

At a ministerial roundtable session at the Global Platform for Disaster Risk Reduction, Accelerating Financing for Resilience: Tailored Solutions for Disaster Risk Reduction, ministers from 43 countries, together with the World Bank and UNDP, discussed the challenges and opportunities they face when financing resilience building; their experiences, successes and solutions; and concrete proposal for inclusive and equitable financing strategies.

The ministers acknowledged that there is a deficit in global financing for disaster preparedness. The Philippines, South Sudan, Fiji, Barbados, and members of the African Union, amongst others, drew connections between financial planning for disaster risk and broader climate financing, noting the important role of resources like the Green Climate Fund, the Adaptation Fund, and the Loss and Damage Fund.

Financing resilience is public investment

Too often, public budgets only respond after disaster strikes. The consequence is mounting human and economic losses, especially in vulnerable countries.

“The root causes of disaster risk – inequality, misaligned financial incentives, insufficient risk governance – remain unaddressed in many development models.”

– UNDRR’s 2025 Global Assessment Report on Disaster Risk Reduction (GAR 2025) 

To address this will require a fundamental rethink, positioning disaster risk reduction firmly in development finance.

“We must support developing countries in establishing national disaster risk reduction financing systems that are tailored to their development priorities.”

– Kamal Kishore at the ministerial roundtable. 

These systems must be pro-active, not reactive, and aligned with each country's unique development goals, while integrating a firm understanding of systemic and cascading risks.

India, for example, is taking a rule-based approach with pre-determined allocations that flow from national to district levels. Japan and Norway noted that they are both mainstreaming DRR into private sector practice, with Norway advocating for legal requirements for DRR in corporate strategies.

The GAR 2025 findings reinforce this more holistic approach, recommending that countries reconfigure their financial and economic governance to create more favourable conditions for DRR investments, especially by shifting public spending "away from short-term consumption and toward resilience-building."

Integrating disaster risk financing into budgets

Resilient budgets require more than a single DRR line item.

Mr. Kishore highlighted the need to embed risk considerations throughout public financial planning: "This includes exploring ways of embedding resilience into budget planning at every level."

That means sectoral ministries, infrastructure agencies, local governments, and fiscal authorities must all adopt risk-informed budget planning. This shift is not just about earmarking funds, but about transforming how development priorities are selected, financed, and measured.

Countries including Brazil are calling for a global task force on effective DRR financing, while the Philippines proposed a global financing mechanism to support disaster resilience efforts, recognising the need to anchor DRR in fiscal systems.

In a conversation with Deputy Secretary-General Amina J. Mohammed, Mr Kishore noted that we need a coordinated, global system making the appropriate mechanisms accessible to those who need them most:

“We have the tools to assess risk and see how much investment will lead to what kind of reduction in risk. We really need to make it a comprehensive system – where national budgets, whether countries have high income or low income – take into account the kind of disaster risk they face and systematically invest in it.” 

Ms. Mohammed noted the need to develop more innovative financing mechanisms as a key priority during the Global Platform.

“We need to get to a space where we have more tools accessible to us to do it, and that again is a big challenge for this week.” 

Tackling systemic challenges

For many countries, even those with the political will to invest in reducing disaster risk, systemic barriers stand in their way. These include:

• Weak institutional frameworks for DRR investment planning.
• Limited understanding of how DRR links to fiscal risk.
• Inadequate incentives to prioritise risk reduction in capital budgeting.

DRR financing also needs to penetrate to local levels, enabling resources to reach the communities that need them most. Without fiscal devolution, even the most risk-informed national strategies will fall short in implementation.

Incentives for private sector investment

Initiatives to finance resilience must move away from reliance on public coffers.

This involves building stronger partnerships with the private sector, and cultivating greater awareness of the benefits of such investments and the dangers of neglecting them.

“We must enhance partnerships with the private sector, as it is a major source of financing that is often not guided by an understanding of disaster risks,” Kamal Kishore said. 

The financial sector can play a catalytic role by developing innovative instruments, such as resilience bonds, blended finance structures, and a broad spectrum of insurance solutions. Several countries are already putting such innovations into practice:

• China described its rollout of agricultural insurance, and its investment of $154 billion in property insurance.
• Kiribati described its community-based insurance for drought programme providing payouts to farmers and fishers.
• Norway highlighted parametric insurance schemes.
• The Bahamas explained how they use their disaster-related expenditures tracking tool to map pre-disaster investments and post-disaster costs.

To mainstream such approaches, updated regulatory frameworks, disclosure standards, and fiscal incentives are needed to guide private capital toward risk reduction and embed DRR into national financial systems.

Risk-aware international finance

The global community must step up to encourage investors, both public and private, to prioritize DRR financing.

“We must rally the international community to prioritize investment in disaster risk reduction. This includes dedicating a larger portion of assistance funding to disaster risk reduction and ensuring all development funding is risk informed.”

– Kamal Kishore

Official development assistance (ODA) and climate finance must be structured and delivered accordingly. Risk-blind development projects, even when well-intentioned, can inadvertently amplify vulnerability.

Several countries at the roundtable - including Cambodia, Paraguay, and Montenegro - highlighted the importance of integrating DRR into social investment strategies, including gender-responsive financing, elderly-focused social protection, and health system resilience. Czechia called for embedding DRR funding across the humanitarian-development nexus.

“The upcoming Fourth International Conference on Financing for Development presents a critical opportunity to advance all these priorities to ensure all development is safe from disasters.”

– Kamal Kishore

The shift toward DRR financing within national budgets is technically feasible, economically wise, and morally urgent. As extreme weather events, pandemics, and conflict interact in increasingly complex ways, the costs of inaction grow exponentially.

By embedding DRR in national budgets, governments protect long-term development investments, and communities gain tools and funding for local resilience.

Additionally, the private sector becomes a co-architect of safety, increasing its stake in resilience building efforts, and international aid transitions from offering band-aids to repeated crises to providing a backbone for lasting stability.

“We must acknowledge that resilience is a long-term economic necessity, and it does have the best return on investment.”

– Amina Mohammed