There is a close link between development and disaster risk. According to a recent report, “Reducing Disaster Risk: Challenge for Development,” disaster risk accumulates historically through inappropriate development interventions. Countries with similar patterns of natural hazards have widely varying levels of disaster risks. Natural disasters also tend to have a disproportionate impact on less developed countries causing much greater losses in terms of fatalities and GDP than in developed countries.

If disaster impacts are not anticipated and planned for, the diversion of scarce resources to relief and reconstruction efforts can have high opportunity costs in terms of economic development and welfare. Pro-active risk management entails the incorporation of loss mitigation and financing measures into development planning. Besides the macroeconomic effects on economic growth and development, disasters often place intractable burdens on poor households and small businesses. Who pays for catastrophic losses? Who owns the risk? These questions should be addressed by policymakers.