Assessing the financial vulnerability to climate-related natural hazards
This paper assesses the high financial vulnerability to the impacts of extreme weather events of national governments, in particular developing countries and small island states. It highlights three main implications: (i) efforts to reduce risk need to be ramped-up to lessen the serious human and financial burdens; (ii) there is a case for country risk aversion implying that disaster risks faced by some governments cannot be absorbed without major difficulty; and (iii) financially vulnerable (and generally poor) countries are unlikely to be able to implement pre-disaster risk financing instruments themselves, and thus require technical and financial assistance from the donor community.