Assessing the Financial Vulnerability to Climate-Related Natural Hazards

There is increased concern about the rising costs from weather extremes. For financially vulnerable countries, there are three main implications: (i) efforts to reduce risk need to be seriously stepped up in order to reduce the serious human and financial burdens to the affected population, business and fiscal stance; (ii) there is a case for country risk aversion implying that disaster risks faced by some governments cannot be absorbed without major difficulty; (iii) without exception, all financially vulnerable countries due to their development status are very unlikely to be able to implement pre-disaster risk financing instruments themselves. In order to reduce their financial vulnerability by their own means, they require technical and financial assistance from the donor community.