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Disaster Management QUESTION #6537
Question 1
In designing a national disaster risk financing strategy, which principle should guide the portfolio approach?
  • Minimizing government expenditure
  • Layering instruments to match risk probabilities with appropriate financing tools (reserves for frequent events, insurance/contingent credit for rare catastrophes)✔️
  • Relying primarily on international assistance
  • Maximizing insurance coverage
Correct Answer Explanation
Section 9.1 advocates for a comprehensive financing strategy covering the full spectrum of DRM interventions. Effective disaster risk financing uses a layered approach: reserves/budgets for frequent low-impact events, insurance for medium-probability events, and contingent credit/catastrophe bonds for rare catastrophic events.