Exploiting International Financial Markets to Manage Natural Hazard Risks in Latin America

Abstract

This technical paper analyzes the potential practical application of financial instruments for natural hazard risk finance and transfer in Latin America. The study first presents an overview of the role of financing and risk transfer in disaster risk management. It then investigates the sources of natural hazard risk and presents use of financial instruments for managing risk for the cases of Chile, El Salvador and Peru. The document also discusses the role donors and multilateral development banks should have in supporting disaster risk financing in the region. This paper was discussed at a Disaster Risk Finance Seminar held at the IDB in Washington, DC on September 9, 2004