IBRD offers a line of catastrophe risk financing for direct budget support that provides varying levels of protection depending on the type, frequency, and severity of the event:

Weather hedges

Financial contracts based on an underlying weather index that transfer the risk to the financial markets.  Payments are triggered by adverse weather events according to pre-specified conditions (e.g. levels of rainfall, seasonal temperatures, etc.). IBRD offers weather derivatives intermediation services to both middle- and low-income countries. See how Malawi uses weather hedges to insure against drought.

Contingent financing

The Catastrophe Deferred Drawdown Option or Cat DDO provides countries with immediate access to financing following a natural disaster and the declaration of a state of emergency. Countries must have a disaster risk management framework in place. See how Costa Rica used IBRD contingent financing for earthquake response.

Catastrophe bonds

Transfer the risk of a natural disaster to investors by allowing the issuer to not repay the bond principal if a major natural disaster occurs. IBRD has developed the MultiCat Program - a bond issuance platform - that transfers diversified risk to private investors. See how MultiCat works in practice.