Confronting simultaneous Climate, Public Health, and Economic Shocks in Developing Countries

Developing countries and small economies are facing the prospect of more frequent and devastating compound shocks, defined as multiple disruptive events—including natural disasters, economic and financial crises, and pandemics—striking simultaneously or in rapid sequence. Compound shocks are more devastating than isolated shocks. In many countries, compound shocks are taking place in a context of already tight fiscal constraints and financial fragility. The disaster risk finance architecture has evolved to respond to a growing diversity of shocks, but gaps remain.

This note builds on WRI’s 2019 study (https://www.wri.org/publication/disaster-risk-pooling) on the future of disaster risk pools in developing countries which provided three broad options for strengthening the disaster risk finance architecture. This note provides more detail on how two of those options might be operationalized and adapted to a changing context.