ISO 37116:2026

Sustainable cities and communities — Disaster risk finance — Principles and general requirements for financing ex-ante investment in risk reduction

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 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.

Villes et communautés territoriales durables — Financement des risques de catastrophe — Principes et exigences générales pour le financement des investissements ex ante dans la réduction des risques

General Information

• Status: Published
• Publication Date: 11-May-2026
• ICS: 03.100.01 - Company organization and management in general
• ICS: 13.020.20 - Environmental economics. Sustainability
• Technical Committee: ISO/TC 268 - Sustainable cities and communities
• Drafting Committee: ISO/TC 268 - Sustainable cities and communities
• Current Stage: 6060 - International Standard published
• Start Date: 12-May-2026
• Due Date: 08-Feb-2027
• Completion Date: 12-May-2026

Overview

ISO 37116:2026 – Sustainable cities and communities - Disaster risk finance - Principles and general requirements for financing ex-ante investment in risk reduction is an international standard developed by ISO. It provides a comprehensive framework for organizations seeking or providing finance to support proactive (ex-ante) investment in disaster risk reduction (DRR) for cities and communities. The focus is on the use of debt instruments such as loans and bonds to fund pre-disaster preparedness, risk mitigation, and resilience-building activities.

The standard defines key principles and general requirements for ex-ante DRR finance, supporting decision-making for financing projects, assets, and activities that address potential disaster risks. By providing eligibility criteria and process guidelines, ISO 37116:2026 aims to facilitate effective financial flows that contribute to reducing disaster-related losses and strengthening community resilience.

Key Topics

• Principles for Ex-Ante DRR Finance
  ISO 37116:2026 establishes foundational principles for financing disaster risk reduction, emphasizing the cost-effectiveness of investing in risk reduction before disasters occur. It promotes treating DRR activities as an investment, not an expense, integrating risk reduction into financial and fiscal instruments.

• Types and Categories of Finance
  The standard focuses on debt-based ex-ante finance instruments:

  • Loans and bonds: To support organizational or project-specific DRR.
  • Sovereign loans: Leveraging public funds for large-scale or governmental DRR initiatives.
  • Note: Although primarily centered on debt instruments, ISO 37116:2026 can be applied alongside insurance, equity, grants, or other financial instruments.

• Eligibility Criteria and Processes

  • Outlines requirements for organizations and projects to qualify for DRR finance.
  • Sets out processes for evaluating, selecting, and reporting on DRR-financed activities.
  • Ensures accountability, proper management of proceeds, and alignment with international DRR strategies such as the Sendai Framework.

• Stakeholder Benefits

  • Clear articulation of how various stakeholders-borrowers, lenders, governments, DRR solution providers, and communities-benefit from structured, transparent, and impact-oriented DRR financing.

Applications

ISO 37116:2026 is relevant for a wide range of entities operating within cities and communities, including:

• Local & National Governments

  • Securing funds for proactive disaster preparedness and resilience infrastructure.
  • Integrating DRR finance into municipal investment strategies and budget allocations.

• Private Sector & Industry

  • Attracting investors by demonstrating reduced disaster risk, strengthening reputation, and mitigating potential business interruptions.
  • Financing and implementing resilient supply chains and operations.

• Financial Institutions & Investors

  • Assessing the disaster risk profile of borrowers and projects.
  • Channeling funds into projects with demonstrable DRR benefits.

• NGOs and DRR Solution Providers

  • Gaining access to financing for innovation and provision of disaster risk reduction solutions.
  • Supporting community-based risk reduction initiatives.

• Urban Planners & Infrastructure Developers

  • Embedding DRR considerations into the design, construction, and retrofitting of critical infrastructures.

By standardizing ex-ante disaster risk finance, ISO 37116:2026 supports the achievement of global goals like the United Nations Sustainable Development Goals (SDGs) and complements climate adaptation and resilience investment strategies.

Related Standards

Organizations implementing ISO 37116:2026 may also benefit from referencing these related standards:

• ISO 37101: Sustainable development in communities - Management system.
• ISO 37123: Indicators for resilient cities.
• ISO 22301: Business continuity management systems.
• ISO 31000: Risk management guidelines.
• ISO 14097: Green finance and investment.
• Sendai Framework for Disaster Risk Reduction (2015-2030): United Nations framework aligning with the principles of proactive DRR investment.

By adopting ISO 37116:2026, cities and communities can systematically mobilize finance for disaster preparedness, prioritize proactive investment, and build a foundation for safer, more sustainable urban development.

Standards Content (Sample)

International
Standard
ISO 37116
First edition
Sustainable cities and
2026-05
communities — Disaster risk
finance — Principles and general
requirements for financing ex-ante
investment in risk reduction
Villes et communautés territoriales durables — Financement des
risques de catastrophe — Principes et exigences générales pour
le financement des investissements ex ante dans la réduction des
risques
Reference number
© ISO 2026
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
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or ISO’s member body in the country of the requester.
ISO copyright office
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Phone: [phone]
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Website: www.iso.org
Published in Switzerland
ii
Contents Page
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 . 6
6.1 General .6
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 . 7
7.1 Types of finance .7
7.2 Key categories of the finance .7
8 Eligibility criteria for the finance . 8
8.1 General .8
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
8.3.1 General .9
8.3.2 Eligibility criteria for the DRR loan or DRR bond for a project, asset or activity
that reduces the borrower/issuer’s disaster risks .9
8.3.3 Eligibility criteria for the DRR loan or DRR bond for a project, asset or activity
that provides solutions for other organizations’ DRR .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
9.4.1 General .11
9.4.2 Ensuring the eligibility criteria are met .11
9.4.3 Testing the eligibility of the request for the DRR loan .11
9.4.4 Reporting .11
9.5 Process for the DRR loan for a project, asset or activity . 12
9.5.1 General . 12
9.5.2 Process for evaluation and selection of a project, asset or activity . 12
9.5.3 Testing the eligibility of the request for the DRR loan . 12
9.5.4 Management of proceeds . 13
9.5.5 Reporting . 13
9.6 Process for the DRR bond for a project, asset, or activity . 13
9.6.1 General . 13
9.6.2 Process for evaluation and selection of a project, asset, or activity.14
9.6.3 Testing the eligibility of the issuance of the DRR bond .14
9.6.4 Management of proceeds .14
9.6.5 Reporting . 15
Bibliography .16

iii
Foreword
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The procedures used to develop this document and those intended for its further maintenance are described
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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  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  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)
[22]
“International Cooperation in Disaster Risk Reduction” that is illustrated in Figure 1. Similarly, proactive
protection is needed when investing in infrastructure resilience to avoid massive downstream costs after a
disaster.
[22] [23]
SOURCE: Created based on References
Figure 1 — Cost-effectiveness of ex-ante investment in disaster risk reduction
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 2 illustrates the situation.

v
Key
Y1 economic losses (billion USD)
Y2 total deaths (thousand)
Y3 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
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 ).
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
[22] [19]
report in 2021 analysed OECD data 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 3 shows the
situation with updates.
vi
Key
Y million USD
1 finance for pre-disaster prevention & preparedness: only 5 %
2 finance at post-disaster stage: 95 %, increasing
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 can support societies’
moving forward to SFDRR and UN SDGs. 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.
vii
Figure 4 — DRR solutions push societies forward to SFDRR and UN SDGs
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
[ ]
strengthening of anticipatory actions.” 25
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
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.”

viii
International Standard ISO 37116:2026(en)
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 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
community
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
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
risk
effect of uncertainty on objectives
[SOURCE: ISO 37100:2016, 3.4.12, modified — Notes to entry removed.]
3.4
risk reduction
actions taken to lessen the probability or negative consequences, or both, associated with a risk
[SOURCE: ISO 22300:2025, 3.2.20]
3.5
disaster risk reduction
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 22300:2025, 3.1.25]
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
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
risk assessment
overall process of risk identification, risk analysis and risk evaluation
[SOURCE: ISO 31073: 2022, 3.3.8]
3.9
project
temporary endeavour to achieve one or more defined objectives
[SOURCE: ISO 21502:2020, 3.20]
3.10
asset
anything that has value to a stakeholder
[SOURCE: ISO 22739:2024, 3.1]
3.11
activity
set of one or more tasks with a defined output
1)
[SOURCE: ISO 22300:2021, 3.1.2 ]
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
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
borrower
person or entity who has contracted a loan
[SOURCE: ISO 14030-2:2021, 3.1.3]
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]
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
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
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]
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.]
1) Withdrawn.
4 Abbreviated terms
DRR disaster risk reduction
SFDRR Sendai Framework for Disaster Risk Reduction 2015-2030
UN SDGs United Nations Sustainable Development Goals
5 Benefits for stakeholders
The finance under this document brings various benefits to stakeholders. Table 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
(irrespective of debt instru-
Stakeholder
ment contexts)
— Obtain funds for investing — Understand what disaster — As insurers, reduce
in reducing disaster risks risks the borrower/ payouts to cover losses
in their business issuer is facing and how incurred by the borrower/
it is reducing the risks, issuer upon disasters
— Enhance its own
thus understanding the by understanding and
reputation or corporate
creditworthiness of the supporting the borrower/
value by reducing
borrower/issuer issuer ’s reducing disaster
disaster risks faced by
risks
the borrower/issuer or by — Enhance its own
Industry and
contributing to reducing reputation or corporate — As insurers, create
commerce
disaster risks faced by the value by contributing to business opportunities
community the borrower/issuer’s and to support other
the community’s DRR organizations’ reducing
— Deepen the understanding
disaster risks and raising
on what to do to reduce
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/ losses incurred by the
in their community issuer is facing and how borrower/issuer upon
it is reducing the risks, disasters, thus making
— Invest in DRR measures,
thus understanding the finance more cost-effective
and prepare in advance
creditworthiness of the
to respond to disasters — Avoid sudden budget
borrower/issuer
without disrupting shifts upon disasters
essential services and help — Enhance its own thanks to enhanced ex-
communities rebuild and reputation by contributing ante investment in risk
return to normal life more to the borrower/issuer’s reduction in the whole
quickly upon disasters and the community’s DRR society
Governments
— Invest in building
(Incl., local gov-
infrastructure or making
ernments)
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 (Not assumed) — Have a new market
provider, obtain funds for opportunity
Academic and
activities to contribute to
research bodies
— Contribute to the
the community’s DRR by
(Incl., DRR solu-
community’s DRR by way
following this document
tion providers)
of innovation and DRR
and communicating with
solutions
the lender/investor
----------------------
...