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Risks and capability

Four global risk objects open the portfolio. Order carries no rank. Each is read across driver, exposure, vulnerability, capacity, cascade and consequence; loss metrics are added only where they can be modelled.

6 min read0 figures1 table18 notesNR-STRATEGIC-INVESTMENT-GLOBAL-2026-BASELINE

Contents
  1. ·Edition home
  2. ·Executive summary
  3. 1Money meets risk
  4. 2Key findings
  5. 3Systems and sectors at baseline
  6. 4Risks and capability
    1. 4.1 Risk objects
    2. 4.2 Capability ladder
  7. 5A loss year that meets tight public budgets
  8. 6Readings from the other desks
  9. 7The 2027 agenda
  10. 8Systems in depth
  11. AMethodology
  12. BData appendix
  13. CReferences and record
  14. ·Complete edition, for print

4.1Risk objects

Each risk is read across the chain from hazard to consequence, with its status and evidence-quality level.

  1. ReportedEQL 4RSK-SR14-FIN-001

    Loss year with tight public budgets

    Driver
    overall disaster losses of about USD 224 billion in 20253
    Exposure
    national budgets, insurers, recovery funds
    Vulnerability
    uninsured shares of 80 to 90% in emerging economies4
    Capacity
    reserve funds; cat bonds; IMF resilience facility59
    Cascade
    CLI → INF → FIN
    Horizon
    1 to 3 years

  2. InferredEQL 3RSK-SR14-INF-002

    Deferred upkeep and a widening gap

    Driver
    a USD 3.6 trillion ten-year gap in one national report card2
    Exposure
    power, water, transport and dams
    Vulnerability
    new build favoured over upkeep in some plans
    Capacity
    dedicated upkeep funds; asset registers
    Cascade
    INF → CLI → FIN
    Horizon
    1 to 5 years

  3. ReportedEQL 3RSK-SR14-DEV-003

    Adaptation finance far below need

    Driver
    USD 65 billion tracked against USD 215 to 387 billion a year needed67
    Exposure
    least developed countries and small island states
    Vulnerability
    debt-heavy flows; weak private finance
    Capacity
    concessional finance; national adaptation plans
    Cascade
    FIN → DEV → INF
    Horizon
    1 to 5 years

  4. InferredEQL 3RSK-SR14-CLI-004

    Recovery money that arrives late

    Driver
    about half of pledges received at September 20258
    Exposure
    countries hit by loss and damage
    Vulnerability
    slow processes from pledge to project
    Capacity
    start-up funding cycle; direct budget support under study8
    Cascade
    CLI → DEV → FIN
    Horizon
    1 to 5 years

4.2Capability ladder

Existence is not readiness. Each of the fifteen capability functions is placed on the ladder by the strongest public evidence at the global level, from a policy listing to performance in real events.

Table 4.1Capabilities on the ladder of evidence: listed, exists, demonstrated, tested
FunctionRungLevelStrongest public evidence at baseline
Prevention and mitigationEXISTSresilience grant rounds and national plans in several countries111619
Monitoring and observationADEQUATEloss series from reinsurers; flow series from trackers36
Early warningLISTEDinvestment-side warning not consolidated
Preparedness and planningEXISTSnational plans and risk-management standards1642
Redundancy and reservesLISTEDreserve funds not consolidated
ResponseDEMONSTRATEDinsurers paid large losses in 202534
Continuity of critical servicesLISTEDfunding continuity for upkeep not consolidated
RecoveryEXISTSrecovery funds exist; payment lags pledges8
AdaptationEXISTSadaptation plans in many countries; finance below need67
Social protectionLISTEDsupport funding not consolidated
Finance and insuranceDEMONSTRATEDcat bonds at record size; IMF facility in use59
Institutional coordinationEXISTSbudget rules and fund governance differ by country152030
Technical infrastructureEXISTSageing assets in places2
WorkforceLISTEDskills for upkeep and delivery not consolidated
Research capacityADEQUATEadaptation economics mature223839
A capability listed in policy is not a tested one; each rung is the strongest public evidence at baseline.

Notes

Numbers are the edition’s reference numbers, so a note reads the same in every chapter. The full list, with every source and its licence, is in Annex C. Annex C, references

  1. 3Munich Re (ed.), Natural disaster figures for 2025 (media information, 2026; overall losses about USD 224 billion; insured losses about USD 108 billion; weather events 92% of overall losses; Los Angeles wildfires about USD 53 billion overall). Munich Re, Munich. Observation year 2025. Accessed 2026-11-03.back
  2. 4Artemis (ed.), report on the Swiss Re Institute sigma 1/2026 natural catastrophe figures for 2025 (insured losses USD 107 billion; overall losses USD 220 billion; about 49% insured; 92% of insured losses from secondary perils; 80 to 90% of losses typically uninsured in emerging economies). Read in this trade report, not in the sigma itself. Artemis, Bermuda. Observation year 2025. Accessed 2026-11-03.back
  3. 5Artemis (ed.), Catastrophe bond market records that were broken in 2025 (issuance about USD 25.6 billion; outstanding market just over USD 61.3 billion; 122 new 144A and private deals). Artemis, Bermuda. Observation year 2025. Accessed 2026-11-03.back
  4. 9IMF (ed.), 2026 Update of Resource Adequacy of the Poverty Reduction and Growth Trust, Resilience and Sustainability Trust, and Debt Relief Trusts, policy paper, 6 March 2026 (27 RSF arrangements; commitments SDR 10.3 billion, about USD 14 billion; five new RSFs in 2025 for SDR 3.4 billion). International Monetary Fund, Washington. Observation year 2026. Accessed 2026-11-03.back
  5. 2ASCE (ed.), 2025 Report Card for America’s Infrastructure (overall grade C; ten-year investment gap USD 3.6 trillion; energy D+, drinking water C−, dams D+). American Society of Civil Engineers, Reston. Observation year 2025. Accessed 2026-11-03.back
  6. 6Climate Policy Initiative (ed.), Global Landscape of Climate Finance 2025 (publication page, 23 June 2025; global climate finance USD 1.9 trillion in 2023; adaptation finance USD 65 billion, likely an underestimate; international flows to emerging and developing economies USD 196 billion, 78% public). Climate Policy Initiative, London. Observation year 2023. Accessed 2026-11-03.back
  7. 7UNFCCC (ed.), New collective quantified goal on climate finance, decision text FCCC/PA/CMA/2024/L.22, 24 November 2024 (at least USD 300 billion a year by 2035; call for USD 1.3 trillion a year from all sources; adaptation finance needs USD 215 to 387 billion a year to 2030). United Nations Framework Convention on Climate Change, Bonn. Observation year 2024. Accessed 2026-11-03.back
  8. 8UNFCCC (ed.), Report of the Board of the Fund for responding to Loss and Damage, addendum FCCC/CP/2025/10/Add.1, 10 November 2025 (pledges USD 790.24 million and amount received USD 397.74 million at 23 September 2025; 27 contributors). United Nations Framework Convention on Climate Change, Bonn. Observation year 2025. Accessed 2026-11-03.back
  9. 11FEMA (ed.), Building Resilient Infrastructure and Communities (programme page updated 3 September 2026; fiscal years 2024 and 2025 funding opportunity of USD 1 billion published 25 March 2026; applications closed 23 July 2026). Federal Emergency Management Agency, Washington. Observation year 2026. Accessed 2026-11-03.back
  10. 16Tribune India (ed.), Japan approves 20 trillion yen plan for disaster resilient infrastructure (press agency report of 7 June 2025; more than 20 trillion yen over fiscal 2026 to 2030). Tribune India, Chandigarh. Observation year 2025. Accessed 2026-11-03.back
  11. 19NSW Government (ed.), Disaster Ready Fund (page on the Commonwealth programme; AUD 1 billion nationally over five years from 1 July 2023 to 30 June 2028). New South Wales Government, Sydney. Observation year 2023. Accessed 2026-11-03.back
  12. 42UNVERIFIED, not opened: ISO 14091:2021, Adaptation to climate change: guidelines on vulnerability, impacts and risk assessment. International Organization for Standardization, Geneva. Observation year 2021. Accessed 2026-11-03.back
  13. 15Noerr (ed.), Bundestag approves exemption from the debt brake for defence spending and special funds for investments in infrastructure and climate protection (law-firm note; Bundestag vote 18 March 2025, Bundesrat 21 March 2025; EUR 100 billion for the Climate and Transformation Fund and EUR 100 billion for the states; twelve-year term). Noerr, Berlin. Observation year 2025. Accessed 2026-11-03.back
  14. 20European Parliament (ed.), European Competitiveness Fund, legislative observatory summary (proposed envelope EUR 234.3 billion for 2028 to 2034; multiannual financial framework described as a EUR 2 trillion budget). European Parliament, Brussels. Observation year 2025. Accessed 2026-11-03.back
  15. 30UNVERIFIED, not opened: Australian National Audit Office, Award of funding under the Disaster Ready Fund, audit report, taken from search-result summaries; the page returned a service error. Australian National Audit Office, Canberra. Observation year 2025. Accessed 2026-11-03.back
  16. 22World Resources Institute (ed.), 4 things to know about the global adaptation challenge (commentary of 10 September 2019 on the Global Commission on Adaptation; USD 1.8 trillion invested 2020 to 2030 could yield USD 7.1 trillion net benefits; benefit-cost ratios about 2 to 1 to 10 to 1). World Resources Institute, Washington. Observation year 2019. Accessed 2026-11-03.back
  17. 38UNVERIFIED, not opened: Hallegatte, S., Rentschler, J. and Walsh, B., Building Back Better: Achieving Resilience through Stronger, Faster, and More Inclusive Post-Disaster Reconstruction. World Bank, Washington, 2018, cited from memory. Observation year 2018. Accessed 2026-11-03.back
  18. 39UNVERIFIED, not opened: Rozenberg, J. and Fay, M., Beyond the Gap: How Countries Can Afford the Infrastructure They Need while Protecting the Planet. World Bank, Washington, 2019, cited from memory. Observation year 2019. Accessed 2026-11-03.back

Cite this chapter

Valadbaygi, S. (Ed.). (2026). Chapter 4: Risks and capability. In Strategic Systems Report 2026: Global Resilience Investment and National Portfolios (Baseline Edition 2026, Report No. NR-STRATEGIC-INVESTMENT-GLOBAL-2026-BASELINE) [Draft under review]. The Global Centre for Risk and Innovation (GCRI).

Every citation form of the whole report, BibTeX and RIS included, is on the edition home. Cite this report

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