The growing crisis protection gap is a significant driver of global hunger, as it leaves vulnerable people without the financial support they need to recover from shocks - whether weather-related or otherwise - that threaten their lives, livelihoods and food security. This gap means that people often lack the resources to protect themselves and rebuild in the aftermath of crises, exacerbating food insecurity. 

Smallholder farmers, pastoralists, small and micro entrepreneurs across the world are highly vulnerable to climate-related risks, such as droughts, floods, tropical cyclones, hurricanes and storms. They also have very limited access to the risk financing tools and services that can provide protection from the resulting financial losses. This means that they are often unable to protect themselves and rebuild in the aftermath of crises, exacerbating food insecurity. 

At the same time, governments are also struggling to keep pace with the growing scale and complexity of risks. Compounding shocks - such as extreme weather events, conflict, financial crises, and pandemics - are stretching national budgets and limiting governments' ability to respond effectively to disasters.

More needs to be done to ensure that the funds are available to bridge the gap between the immediate needs of disaster-affected populations and the resources available. A scale-up of climate and disaster risk financing instruments is urgently needed to enable governments and the humanitarian sector to protect the most vulnerable people from the rising frequency and intensity of weather-related shocks.  

In the face of these challenges, the World Food Programme (WFP) helps communities and governments to better prepare for, respond to and recover from climate-related shocks. WFP has developed and tested innovative disaster risk financing solutions by focusing on two approaches: inclusive risk financing (at the household and community level) and macro-level risk financing (at the regional and national levels). Additionally, to  capture the different degrees of risk, WFP adopts a risk-layering approach.

By diversifying its risk financing instruments, WFP aims to strengthen its response capacity and enable fast assistance to reach vulnerable populations more effectively.

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Protecting people from shocks

Inclusive Risk Financing

Inclusive Risk Financing refers to financial solutions – such as savings, loans and insurance – designed to make financial protection accessible to underserved and vulnerable populations. As weather-related shocks grow in frequency and intensity, these tools play a critical role in helping communities prepare for, manage and recover from extreme weather events. Over the past ten years, WFP has unlocked access to financial services for over 10 million people through integrated risk management strategies. Building on its work with the R4 Rural Resilience Initiative WFP has evolved this model into a more comprehensive Inclusive Risk Financing approach.

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