ISO/FDIS 37116

ISO/TC 268
Secretariat: AFNOR
Date: 2025-12-162026-01-22
Sustainable cities and communities — Disaster risk finance —
Principles and general requirements for financing ex-ante
investment in risk reduction
FDIS stage
All rights reserved. Unless otherwise specified, or required in the context of its implementation, no part of this publication
may be reproduced or utilized otherwise in any form or by any means, electronic or mechanical, including photocopying,
or posting on the internet or an intranet, without prior written permission. Permission can be requested from either ISO
at the address below or ISO’s member body in the country of the requester.
ISO copyright office
CP 401 • Ch. de Blandonnet 8
CH-1214 Vernier, Geneva
Phone: + 41 22 749 01 11
EmailE-mail: copyright@iso.org
Website: www.iso.org
Published in Switzerland
ii
Contents
Foreword . iv
Introduction . v
1 Scope . 1
2 Normative references . 1
3 Terms and definitions . 1
4 Abbreviated terms . 4
5 Benefits for stakeholders . 4
6 Principles . 5
6.1 General . 5
6.2 Cost-effectiveness of ex-ante investment . 6
6.3 Disaster risk reduction as investments . 6
6.4 Integration of DRR considerations in financial and fiscal instruments . 6
6.5 Focus on risk reduction . 6
6.6 Accountability . 6
7 Types and categories of the finance . 6
7.1 Types of finance . 6
7.2 Key categories of the finance . 7
8 Eligibility criteria for the finance . 7
8.1 General . 7
8.2 Eligibility criteria for the DRR loan for an organization . 8
8.3 Eligibility criteria for the DRR loan and DRR bond for a project, asset, or activity . 9
9 Process for the finance . 10
9.1 General . 10
9.2 Providing motivation . 10
9.3 Timing for arrangement of the finance . 10
9.4 Process for the DRR loan for an organization . 11
9.5 Process for the DRR loan for a project, asset or activity . 12
9.6 Process for the DRR bond for a project, asset, or activity. 14
Bibliography . 16

iii
Foreword
ISO (the International Organization for Standardization) is a worldwide federation of national standards
bodies (ISO member bodies). The work of preparing International Standards is normally carried out through
ISO technical committees. Each member body interested in a subject for which a technical committee has been
established has the right to be represented on that committee. International organizations, governmental and
non-governmental, in liaison with ISO, also take part in the work. ISO collaborates closely with the
International Electrotechnical Commission (IEC) on all matters of electrotechnical standardization.
The procedures used to develop this document and those intended for its further maintenance are described
in the ISO/IEC Directives, Part 1. In particular, the different approval criteria needed for the different types of
ISO document should be noted. This document was drafted in accordance with the editorial rules of the
ISO/IEC Directives, Part 2 (see www.iso.org/directives).
ISO draws attention to the possibility that the implementation of this document may involve the use of (a)
patent(s). ISO takes no position concerning the evidence, validity or applicability of any claimed patent rights
in respect thereof. As of the date of publication of this document, ISO had not received notice of (a) patent(s)
which may be required to implement this document. However, implementers are cautioned that this may not
represent the latest information, which may be obtained from the patent database available at
www.iso.org/patents. ISO shall not be held responsible for identifying any or all such patent rights.
Any trade name used in this document is information given for the convenience of users and does not
constitute an endorsement.
For an explanation of the voluntary nature of standards, the meaning of ISO specific terms and expressions
related to conformity assessment, as well as information about ISO's adherence to the World Trade
Organization (WTO) principles in the Technical Barriers to Trade (TBT), see www.iso.org/iso/foreword.html.
This document was prepared by Technical Committee ISO/TC 268, Sustainable cities and communities.
Any feedback or questions on this document should be directed to the user’s national standards body. A
complete listing of these bodies can be found at www.iso.org/members.html.
iv
Introduction
0.1 0.1  General
Disaster risk reduction (DRR) is a systematic approach to identifying, assessing and reducing the risks of
disaster. It aims to reduce socio-economic and environmental vulnerabilities to disasters as well as to deal
with geophysical, hydrometeorological, environmental and other hazards that trigger them. This approach is
essential for communities to adapt to climate change and become sustainable and resilient.
0.2 0.2  Cost-effectiveness of ex-ante investment in risk reduction
In reducing disaster risks, ex-ante investment in risk reduction before disasters occur is particularly important
due to its cost-effectiveness relative to ex-post spending. As stated in the Guiding Principle (j) of the Sendai
Framework for Disaster Risk Reduction 2015-2030 (SFDRR), “addressing underlying disaster risk factors
through disaster risk-informed public and private investments is more cost-effective than primary reliance on
post-disaster response and recovery”. Indeed, “every USD1 invested in risk reduction and prevention can save
up to USD15 in post-disaster recovery”, as is pointed out by UNDRR (2021) “International Cooperation in
[22 ]
Disaster Risk Reduction” ”(Reference [13]) that is illustrated in Figure 1Figure 1. . Similarly, proactive
protection is needed when investing in infrastructure resilience to avoid massive downstream costs after a
disaster.
SOURCE: Created based on Reference [12][13]

[22] [23]
SOURCE: Created based on References
Figure 1 — Cost-effectiveness of ex-ante investment in disaster risk reduction
0.3 0.3  Increasing disasters and limited absorption capacity
Ex-ante investment in risk reduction is also important due to the limitation of absorption capacity. In the face
of disasters increasing in intensity and frequency, economic losses from disasters have been increasing in the
long term, while the capacity of the global reinsurance market to absorb economic losses from disasters is
finite. Figure 2Figure 2 illustrates the situation.
v
1 Global reinsurance market’s capacity in 2017 (USD 340 million)
SOURCE: Created based on Reference [7] [8] [10]

Key
Y economic losses (billion USD)

Y total deaths (thousand)
Y total affected (million)
1 global reinsurance market’s capacity in 2017 (USD 340 million)
2 economic losses
3 total deaths
4 total affected
[17] [18] [20]
SOURCE: Created based on References
Figure 2 — Increasing disaster loss in contrast with limited absorption capacity
vi
0.4 0.4  The ex-ante DRR finance
In this context, finance should play a key role in motivating ex-ante investment in risk reduction. This
document provides a way of embodiment of “integration of disaster risk reduction considerations and
[21 ]
measures in financial and fiscal instruments” (Priority 3 30.(m) of SFDRR ). ).
To this end, it is essential to provide principles and general requirements for such finance that motivates
borrowers’ ex-ante investment in risk reduction.
The disaster related finance at the pre-disaster stage has not been active so far. For example, UNDRR’s report
[22 ] [19 ]
in 2021 (Reference [12]) analysed OECD data (Reference [9]) on disaster-related international funding
worldwide between 2010 and 2019. According to the analysis, only 5 % of the total amount was allocated for
the pre-disaster prevention and preparedness stage, while 95 % of the total amount was for the post-disaster
stages. There is a significant potential to increase the volume of finance at the pre-disaster stage.
Figure 3Figure 3 shows the situation with updates.

SOURCE: Created based on Reference [9] [12]

Key
Y million USD
1 finance for pre-disaster prevention & preparedness: only 5 %
2 finance at post-disaster stage: 95 %, increasing
vii
disaster prevention and prepardness

reconstruction relief and rehabilitation

emergency response
[19] [22]
SOURCE: Created based on References
Figure 3 — The disaster-related finance in international development
Also, the ex-ante DRR finance explicitly involves “DRR solution” providers. They provide DRR solution
products or services to any organization interested in making ex-ante investment in risk reduction. Promoting
the development and utilization of “DRR solutions” through the finance willcan support societies’ moving
forward to SFDRR and UN SDGs. Figure 4. Figure 4 illustrates the concept by connecting to SFDRR and UN
SDGs.
The ex-ante DRR finance in this document relates to debt instruments. The principles and general
requirements in this document are not directly applicable to insurance or risk transfer instruments, although
this document can be utilized with such instruments designed to motivate ex-ante investment in risk
reduction.
viii
Figure 4 — DRR solutions push societies forward to SFDRR and UN SDGs
0.5 0.5  Relevance with other global initiatives
There have been global initiatives of finance mechanisms to respond to and recover from already-incurred
losses in the context of climate change (e.g., the Fund responding to Loss and Damage). Such finance
mechanisms are significant in addressing already-unavoidable risks caused by climate change. The ex-ante
DRR finance will complement such significant initiatives. The finance will reduce risks by motivating
borrowers to reduce the physical impact of the hazard itself, vulnerabilities and exposures to hazards. The
finance will address disaster risks regardless of their relation to climate change.
The ex-ante DRR finance is in line with other significant global contexts, such as the following.:
G7 (2023)
“We emphasize the importance of a disaster preparedness approach and investment in human capital, goods
and infrastructure that contribute not only to “risk transfer” but also to “risk reduction,” resulting in the
[25 ]
strengthening of anticipatory actions.” (G7 Hiroshima Leaders’ Communiqué, May 2023)
G20 (2025)
“We encourage the scaling up and greater use of affordable, inclusive pre-arranged financing, to facilitate ex-

ante DRR and preparedness for rapid, flexible, comprehensive and equitable disaster response and recovery.”
[26 ]
(G20 Disaster Risk Reduction Ministerial Declaration, October 2025)
ix
Long Term Investment Club (2023)
“By blending limited public resources with private investments, thanks to the development of stronger
enabling environments, capacity building and innovative lending policies, more and higher quality projects
could be financed, especially in emerging markets and developing economies (EMDEs). It is in fact important
to recognise the significant role private finance could have as an important enabler of resilient infrastructure
[27 ]
and climate actions at large.” (D20 Statement 2023, Dec. 2023)
x
Sustainable cities and communities — Disaster risk finance —
Principles and general requirements for financing ex-ante investment
in risk reduction
1 Scope
This document provides organizations seeking or providing finance with principles and general requirements
for financing ex-ante investment in risk reduction, including disaster preparedness, in cities and communities
(hereinafter the financing is referred to as “ex-ante DRR finance”).
This document also provides principles and general requirements for the ex-ante DRR finance related to
projects, assets and activities.
This document contains requirements that can be used to assess conformity of projects, assets or activities,
and organization’s ability, to this document.
This document is intended to be used by all types and sizes of organizations in cities and communities.
NOTE 1: The ex-ante DRR finance under this document is debt instruments. It does not include insurance or risk
transfer instruments. This document can also be utilized with insurance or risk transfer instruments, equity instruments,
grants, or any other financial instruments.
2 Normative references
There are no normative references in this document.
3 Terms and definitions
For the purposes of this document, the following terms and definitions apply.
ISO and IEC maintain terminology databases for use in standardization at the following addresses:
— — ISO Online browsing platform: available at https://www.iso.org/obp
— — IEC Electropedia: available at https://www.electropedia.org/
3.1 3.1
community
a group of people with an arrangement of responsibilities, activities and relationships
Note 1 to entry: In many, but not all, contexts, a community has a defined geographical boundary.
Note 2 to entry: A city is a type of community.
[SOURCE: ISO 37101:2016, 3.4]
3.2 3.2
disaster
serious disruption to a city or community due to hazardous events interacting with conditions of the physical
aspect of the hazard, exposure, vulnerability and capacity, leading to human, material, economic and/or
environmental losses and impacts
Note 1 to entry: Disasters can be frequent or infrequent, depending on the probability of occurrence and the return
period of the relevant hazard. A slow-onset disaster is one that emerges gradually over time, for example through
drought, desertification, sea level rise, subsidence or epidemic disease. A sudden-onset disaster is one triggered by a
hazardous event that emerges quickly or unexpectedly, often associated with earthquakes, volcanic eruptions, flash
floods, chemical explosions, critical infrastructure failures or transport accidents.
[SOURCE: ISO 37123:2019, 3.2]
3.3 3.3
risk
effect of uncertainty on objectives
[SOURCE: ISO 37100:2016, 3.4.12], modified — Notes to entry removed.]
3.4 3.4
risk reduction
actions taken to lessen the probability or negative consequences, or both, associated with a risk
[SOURCE: ISO 22300:20212025, 3.1.2272.20]
3.5 3.5
disaster risk reduction (DRR)
policy aimed at preventing new and reducing existing disaster risk and managing residual risk, all of which
contribute to strengthening resilience and therefore to the achievement of sustainable development
[SOURCE: ISO 22300:20212025, 3.1.7425]
3.6 3.6
preparedness
knowledge and capacities developed to effectively anticipate, respond to, and recover from the impact of likely
imminent or current hazard events or conditions
[SOURCE: ISO 22315:2014, 3.2]
3.7 3.7
resilience
adaptive capacity of an organization in a complex and changing environment
[SOURCE: ISO 37123:2019, 3.6], modified — Notes to entry removed.]
3.8 3.8
risk assessment
overall process of risk identification, risk analysis and risk evaluation
[SOURCE: ISO 31073: 2022, 3.3.8]
3.9 3.9
project
temporary endeavour to achieve one or more defined objectives
[SOURCE: ISO 21502:2020, 3.20]
3.10 3.10
asset
anything that has value to a stakeholder
[SOURCE: ISO 22739:20202024, 3.1]
3.11 3.11
activity
set of one or more tasks with a defined output
1)
[SOURCE: ISO 22300:2021, 3.1.2] ]
3.12 3.12
disaster risk finance
arrangements for provision of funds, which are designed to motivate recipients to reduce disaster risks,
prepare for disasters, or mitigate financial consequences if disasters occur
3.13 3.13
disaster risk management
application of disaster risk reduction policies and strategies to prevent new disaster risk, reduce existing
disaster risk and manage residual risk, contributing to the strengthening of resilience and reduction of disaster
losses
3.14 3.14
borrower
person or entity who has contracted a loan
[SOURCE: ISO 14030-2:2021, 3.1.3]
3.15 3.15
issuer
entity responsible for fulfilling the contractual obligations of the bond or other debt instrument
[SOURCE: ISO 14030-1:2021, 3.1.5.1]
3.16 3.16
lender
individual or organization that loans money to a borrower to finance consumption or investment, on the
expectation of repayment on contractual terms, usually within a stated period and with interest payment
[SOURCE: ISO 14097:2021, 3.10]
3.17 3.17
investor
individual or organization holding equity or debt categorized as financial assets, including but not limited to
asset owners (e.g. pension funds, insurance companies), asset managers and banks
[SOURCE: ISO 14097:2021, 3.8]
3.18 3.18
loan
money lent, usually at interest, by one or more lenders to a borrower for a limited period
[SOURCE: ISO 14030-2:2021, 3.1.4]

1)
Withdrawn.
3.19 3.19
bond
type of debt instrument that serves as legally enforceable evidence of a debt and the promise of its timely
repayment
[SOURCE: ISO 14030-1:2021, 3.1.1], modified — Note 1 to entry removed.]
4 Abbreviated terms
DRR disaster risk reduction
SFDRR Sendai Framework for Disaster Risk Reduction 2015-2030 (Reference [10])
UN SDGs United Nations Sustainable Development Goals
5 Benefits for stakeholders
The finance under this document brings various benefits to stakeholders. Table 1Table 1 shows the benefits
incurred to each stakeholder.
Table 1 — Benefits for each stakeholder
Capacity As a borrower/issuer As a lender/investor As others
Merged Cells
(irrespective of debt
Merged Cells
instrument contexts)
Stakeholder
Merged Cells
Stakeholder
— Obtain funds for investing — Understand what disaster — As insurers, reduce
in reducing disaster risks risks the borrower/issuer payouts to cover losses
in their business is facing and how it is incurred by the
reducing the risks, thus borrower/issuer upon
— Enhance its own understanding the disasters by
reputation or corporate creditworthiness of the understanding and
value by reducing disaster borrower/issuer supporting the
risks faced by the borrower/issuer ’s
borrower/issuer or by — Enhance its own reducing disaster risks
Industry and contributing to reducing reputation or corporate
commerce disaster risks faced by the value by contributing to — As insurers, create
community the borrower/issuer’s and business opportunities to
the community’s DRR support other
organizations’ reducing
— Deepen the understanding
on what to do to reduce disaster risks and raising
funds
disaster risks by following
this document and
communicating with the
lender/investor
— Obtain funds for investing — Understand what disaster — Reduce payouts to cover
in reducing disaster risks risks the borrower/issuer losses incurred by the
in their community is facing and how it is borrower/issuer upon
reducing the risks, thus disasters, thus making
Governments
— Invest in DRR measures, understanding the finance more cost-
creditworthiness of the effective
and prepare in advance to
(Incl., local
respond to disasters borrower/issuer
governments)
without disrupting — Avoid sudden budget
essential services and help — Enhance its own shifts upon disasters
communities rebuild and reputation by contributing thanks to enhanced ex-
ante investment in risk
Capacity As a borrower/issuer As a lender/investor As others
Merged Cells
(irrespective of debt
Merged Cells
instrument contexts)
Stakeholder
Merged Cells
Stakeholder
return to normal life more to the borrower/issuer’s reduction in the whole
quickly upon disasters and the community’s DRR society
— Invest in building
infrastructure or making
existing infrastructure
robust, to reduce future
risks and to enable
communities to withstand
and recover from disasters
— Strengthen community
preparedness and ensure
that vital support systems
are ready to protect
vulnerable groups upon
disasters
— As a DRR solution — Have a new market
(Not assumed)
provider, obtain funds for opportunity
Academic and
activities to contribute to
research bodies
the community’s DRR by — Contribute to the
(Incl., DRR
following this document community’s DRR by way
solution
and communicating with of innovation and DRR
providers)
the lender/investor solutions
— Have a new market
(Not assumed) (Not assumed)
opportunity (e.g.,
certification, consulting)
Standards
— Contribute to the
application
community’s DRR by way
businesses
of encouraging
stakeholders’ use of this
document
— Contribute to the
(Not assumed) (Not assumed)
community’s DRR by way
Non-
of awareness-raising and
governmental
engagement in
organizations
implementation of DRR
6 Principles
6.1 General
This clause describes principles for the ex-ante DRR finance that lead to the general requirements described
in subsequent clauses.
6.2 Cost-effectiveness of ex-ante investment
Addressing underlying disaster risk factors through disaster risk-informed public and private investments is
more cost-effective than primary reliance on post-disaster response and recovery, and contributes to
[21 ]
sustainable development. [See (SFDRR, , Guiding Principles (j)))]
6.3 Disaster risk reduction as investments
In the context of finance, activities and expenditures for reducing disaster risks are regarded as “investments”
instead of “expenses.” Such activities and expenditures positively contribute to the value of the organization,
such as the corporate value or the reputation of the borrower/issuer or lender/investor.
6.4 Integration of DRR considerations in financial and fiscal instruments
The integration of disaster risk reduction considerations and measures in financial and fiscal instruments is
[21 ]
promoted [See (=SFDRR, , Priority 3, 30.(m)).)]. Finance serves to motivate and accelerate ex-ante
investment in risk reduction and preparedness.
6.5 Focus on risk reduction
Risk reduction based on risk assessment is strategically conducted.
NOTE 1 SFDRR shows the strategy of risk reduction by describing “Priority 3: Investing in disaster risk reduction for
resilience” based on “Priority 2: Strengthening disaster risk governance to manage disaster risk.”
NOTE 2 In managing disaster risks, risk reduction comes as the first step. Only the remaining risks after risk reduction
are subject to further treatments, such as risk transfer.
6.6 Accountability
Organizations acknowledge and take responsibility for DRR management process. They conduct due
reporting, accept appropriate scrutiny, and also accept a duty to respond to this scrutiny.
7 Types and categories of the finance
7.1 Types of finance
The ex-ante DRR finance in this document means the debt instruments that motivate borrower/issuer’s ex-
ante investment in risk reduction including disaster preparedness.
The types of the debt-ins
...