Financial losses caused by natural disasters continue to rise and are felt most acutely by developing countries. Though not always large in absolute terms, losses in developing countries can have especially dire consequences; they may force governments to redirect development funds to disaster response, push the near poor back into poverty, and lead the poor to adopt negative coping mechanisms. Because natural disasters generate significant fiscal risk and create major budget volatility, even countries with robust disaster risk management programs can still be highly exposed to the economic and fiscal shocks caused by major disasters. Through funding and expertise, DRFIP helps countries improve the financial resilience of governments, businesses, and households against natural disasters.
The Disaster Risk Financing and Insurance Program (DRFIP), established in 2010, helps countries ensure that their populations are financially protected in the event of a natural disaster. Currently, DRFIP works in more than 60 countries and protects over 360 million people through World Bank contingent financing. A joint initiative of the World Bank Group's Finance and Markets Global Practice and the Global Facility for Disaster Reduction and Recovery (GFDRR), DRFIP partners with countries to develop and implement tailored financial protection strategies, which bring together sovereign disaster risk financing, agricultural insurance, property catastrophe risk insurance, and scalable social protection programs. These tools help to promote quicker and more resilient disaster response by national and local governments, homeowners, businesses, agricultural producers, and low-income populations.