Skip to main content
main content, press tab to continue

Disaster Risk Finance

Support resilience to climate change and natural hazards with specialist disaster risk analytics, strategic advisory services and tailored disaster risk finance instruments.

Contact Us

Climate change is driving increasingly frequent and intense weather events, including droughts, floods and tropical cyclones. Together with other natural hazards, such as earthquakes and volcanic eruptions, these threats pose significant risk to lives and livelihoods, economic development and sustainable growth.

We support development and humanitarian institutions, governments, non-governmental organizations (NGOs) and corporations across the globe better understand and manage disaster risk, improving preparedness and response efforts for all types of natural hazards.

Why disaster risk finance (DRF) solutions?

We work with you to pre-arrange access to financial resources before a natural hazard occurs. Together, we assess your exposure and vulnerabilities and determine your financial needs for responding to natural hazard events. We translate this into disaster risk strategies and instruments, including pre-arranged, trigger-based mechanisms such as parametric insurance, forecast-based finance and other innovative approaches tailored to your specifications.

Disaster risk finance instruments, such as parametric insurance, can:

  • Reduce uncertainty because your claim amount is calculated according to a pre-agreed scale of payment, helping you to better plan for and respond to impacts
  • Support quicker recovery as access to finance is pre-arranged and payouts are made quickly, typically within weeks after the policy trigger occurs
  • Provide greater transparency with policies that include pre-agreed triggers and payout amounts based on independent and objective data
  • Give you more flexibility by offering unconstrained use of funds, so you can use your payments for whatever you need to support recovery, which traditional insurance may not allow
  • Enhance resilience by reducing the need for negative coping strategies, such as reallocating budgets, slowing productive activities, or selling assets.

How can we help strengthen your resilience with disaster risk finance solutions?

We tailor our DRF solutions to the specific needs of your organization, project, or initiative, given that no disaster risk solutions are the same.

Interrogating both acute extreme events and chronic climate pressures, our approach is focused on rigorously understanding the hazard data relevant to your needs – whether that’s geophysical data on earthquakes and volcanic eruptions, hydrometeorological data on hurricanes, floods, droughts and heatwaves. We then determine the most appropriate disaster risk management strategies and finance solutions for your needs.

We offer:

Based on our climate and disaster risk analysis, we help assess the impacts of natural hazards across geographic locations, sectors, ecosystems and vulnerable population segments to develop a comprehensive view of risk. We work with you to identify appropriate disaster risk management strategies using an integrated approach that links disaster risk reduction, preparedness and response with longer-term recovery and reconstruction efforts. We also provide strategic advisory around the feasibility of various disaster risk finance instruments.

We work with you to translate financial exposures to natural hazards into tailor-made disaster risk finance instruments, including parametric insurance, forecast-based finance and other innovative instruments. Our services span risk assessment, hazard analysis and designing instruments such as parametric indices and triggers. We support financial structuring, offer advisory services on deploying funds and insurance delivery structures and channels, as well as capacity strengthening. We also work with you on placing and servicing your policy, including claims settlement and calculation agent services, working with our Alternative Risk Transfer team.

Our team of experts is dedicated to supporting you throughout the entire process, from analyzing your risks to designing your strategy or solution, right through to implementation and pay-out.

We work around the world, with concentrations in the small, mainly island states of the Caribbean and Pacific, in Central and South America, as well as in Central, South and Southeast Asia and in sub-Saharan Africa, focusing on four key areas:

We provide strategic and technical advisory around hazard assessment, needs estimation, DRF strategy formation, parametric product development and placement, and other appropriate disaster risk finance strategies, including sub-national, regional, and international risk pooling.

We provide advisory to support institutional and operational shock resilience. We support cost-effective disaster risk management, working closely with humanitarian organizations and partners to better link financing for anticipatory action, preparedness and rapid response. We develop shock-responsive social protection schemes through bespoke parametric solutions and mobilizing additional resources from private risk and capital markets.
We design ‘resilience wrapper’ parametric insurance cover to protect sovereign, private and corporate debt from defined natural hazard risks, providing payouts to cover debt servicing obligations in the event of a trigger. We can link these parametric solutions to a current or new debt issuance, or consider these as part of a debt swap. The trigger will be related to the natural hazards most likely to severely impact debt servicing capacity, for example, hurricanes and cyclones in the Caribbean and Pacific Small Island Developing States.
We develop parametric solutions to enhance the resilience of ecosystems, including coral reefs, mangroves and forests impacted by severe climate hazards such as tropical cyclones and wildfires. We also design financial protection solutions that safeguard livelihoods dependent on ecosystem services, such as coastal communities, fishers and the tourism industry.

Why choose our Disaster Risk Finance team?

We are a highly experienced, global team that brings together interdisciplinary expertise and a deep understanding of climate and disaster risk. We unite specialists with backgrounds in insurance, reinsurance, finance, risk management, natural hazards science and international development, to deliver tailored analytics, expert strategic advice and disaster risk finance solutions.

As part of WTW Risk and Analytics, and sitting alongside the Alternative Risk Transfer team, we are uniquely positioned between you and international risk markets, able to call on our deep knowledge of market requirements, our rigorous understanding and representation of your needs and our access to a global network of resources. Combining these, we optimize your risk and insurance spend by translating complex climate risk challenges into smart and needs-responsive disaster risk financing strategies and instruments.

Learn more about alternative risk transfer

Learn more about climate risk

Learn more about parametric insurance

We have a proven track record of working across the globe with a wide range of organizations, including multilateral development banks, regional disaster risk pools, national and local government, conservation and humanitarian organizations and corporations and charities.

How have we helped strengthen resilience through disaster risk finance solutions?

Challenge: Central Asia countries face a significant disaster risk funding gap and lacked a regional risk pooling mechanism.

Solution: We collaborated with the Asian Development Bank (ADB) and the Central Asia Regional Economic Cooperation (CAREC) to enable the development of a regional disaster risk insurance facility covering the CAREC member states (11 Central Asian countries). This involved conducting risk and protection gap assessments, potential insurance and/or capital market product development, roadmaps to creating a pool facility and/or placing and pricing a disaster relief bond for clients, and creating a visualization tool for member states.

Impact: The project acted as a catalyst for in country discussion of hazard, exposure and vulnerability to three hazards: flood, earthquake and infectious disease. CAREC member states have asked the ADB to use the project’s roadmap to create a disaster risk facility, with the option to issue a Disaster Relief Bond.

Challenge: While the Pacific Island countries and territories face climate and natural hazards that could devastate their small and undiversified economies, they have very limited access to disaster risk financing tools able to support resilience.

Solution: PCRIC is one of four regional sovereign risk pools created on a mutual basis to offer parametric DRF instruments to member governments and other entities operating for the public good. We supported PCRIC in developing and underwriting a range of new-to-market products, including drought insurance at the sovereign level, reef insurance for a Fijian conservation foundation and earthquake insurance for the state-owned telecoms network operator in Papua New Guinea (PNG).

Impact: PCRIC has a mandate to support its sovereign member governments to build resilience against climate and other natural disasters. Our technical partnership brings advanced modeling and analytics as well as a great depth of experience with risk pools able to better protect natural assets and communities. The drought product will enable pre-arranged financing for response to water security events before they become disasters, while the reef insurance supports not only conserving critical natural assets but also community resilience in the remote Lau islands. The parametric insurance in PNG can deliver quick financing at scale to minimize the disruption to the country’s critical fiber-optic cable network after impactful earthquakes.

Find out more

Challenge: The Municipality of Medellín needed effective disaster risk financing products to support emergency response actions.

Solution: We developed parametric insurance products tailored to Medellín's specific hazard context, following research on flood, earthquake and landslide perils. We worked to analyze data and provide educational workshops on insurance in disaster risk finance.

Impact: The parametric insurance products and educational workshops we helped develop significantly improved Medellín's risk management capabilities, enhancing its capacity to negotiate and manage parametric insurance products.

Find out more

Challenge: UNICEF recognized how children and youth are among the most vulnerable populations affected by cyclones and needed innovative financing solutions to enhance their resilience.

Solution: In collaboration with UNICEF, we co-designed a unique parametric insurance program providing rapid post-disaster funding for UNICEF to support vulnerable children, youth and their parents. It covers cyclone risk across Bangladesh, Comoros, Fiji, Haiti, Madagascar, Mozambique, Solomon Islands and Vanuatu and incorporates child and youth-responsive exposure and risk analysis.

Impact: The parametric insurance program enables UNICEF to support its efforts in protecting millions of vulnerable children, youth and parents in cyclone-prone regions, ensuring critical help reaches those in need promptly.

Find out more

Challenge: The eastern Caribbean region aims to improve its capacity for disaster risk management and preparedness for hurricanes.

Solution: In collaboration with the Overseas Development Institute (ODI Global) and the International Federation of the Red Cross (IFRC), we conducted a feasibility study for a forecast-based financing (FbF) mechanism. The study provided recommendations for improving disaster risk management capacities, including feasible actions and alternative finance mechanisms.

Impact: The study laid the foundation for more effective preparedness and response to hurricanes in the eastern Caribbean region, enhancing its resilience to these natural disasters.

Challenge: Belize faced the challenge of servicing its public debt while dealing with climate disasters and the COVID-19 pandemic.

Solution: The Nature Conservancy, along with Credit Suisse, assisted the Government of Belize to convert their outstanding privately held debt, amounting to more than $500 million USD, resulting in the issuance of a 20-year blue bond. The blue bond was protected by a resilience wrapper we designed and placed, along with political risk insurance provided by the U.S. Development Finance Corporation.

Impact: The debt conversion resulted in a reduction in the cost of capital and an increase in Belize’s sovereign credit rating, supporting its long-term sustainable development priorities and enhancing its resilience. If a trigger event occurs, the payout goes directly to debt servicing, giving Belize fiscal space to provide necessary humanitarian support.

Find out more

Challenge: The Mesoamerican Reef is increasingly impacted by damaging hurricane events. Without dedicated budgets, reef response is difficult to mobilize quickly in the aftermath of such events.

Solution: Our team worked with the Mesoamerican Reef (MAR) Fund to develop a parametric insurance program to provide coverage for key reef sites across Mexico, Belize, Guatemala and Honduras. Project work included modeling historic and future synthetic hurricane winds across the reefs, designing an appropriate trigger structure and placing in re/insurance markets.

Impact: The insurance program ensures resources are available for immediate reef recovery efforts following a damaging hurricane. If a given cyclone intensity threshold is exceeded in the vicinity of a selected reef area — as measured by wind speed as an appropriate proxy for tropical cyclone damage — this triggers the release of funds to the MAR Fund. MAR Fund then directs funds to trained local reef response teams responsible for clearing debris, reattaching broken corals and conducting reef damage assessments to mitigate post-event damage and kick-start reef recovery.

Find out more

For a smarter way to manage disaster risk, get in touch with our dedicated and experienced specialists.

Contact us