Abstract | A comprehensive disaster risk management strategy is crucial for mitigating the impact of earthquakes and safeguarding valuable cultural heritage. This study, developed within the EU funded project HYPERION, focuses on the cities of Rhodes and Granada, which possess significant cultural assets subject to seismic hazard. Financial risk management plays a pivotal role in this strategy by enabling resource mobilization for efficient disaster response and minimizing long-term financial consequences. Herein we explore the implementation of ex-ante financing options, which are financial arrangements established before disasters occur, to ensure swift and effective response measures. Ex-ante financing options encompass two main approaches: risk retention and risk transfer mechanisms. Risk retention involves setting aside resources, such as contingency funds or individual/shared reserves, for immediate post-disaster use. On the other hand, risk transfer mechanisms shift financial risk to third parties, such as insurance companies or capital markets. To optimize these financing options, we employ a comprehensive approach known as risk layering, which categorizes risks based on their return periods or probabilities. Risk layering facilitates the strategic deployment of various financial tools for each risk layer, resulting in enhanced efficiency and reduced overall costs of risk financing. The aim is to develop a financial risk management strategy based on risk layering for stakeholders in macro-sectors with shared risk characteristics and synergies. We define three risk layers: (i) low-impact, high-frequency risks, where risk retention measures like contingency or mutual funds are most appropriate; (ii) medium-to-severe risks occurring at lower frequencies, for which risk transfer through parametric insurance is identified as the optimal financial risk management tool; and (iii) very high-impact, highly infrequent risks, requiring risk absorption through financial assistance from the public sector and international donors. To determine the most cost-effective thresholds for each layer and stakeholder macrosector, we employ an optimization approach. By tailoring risk management options to the specific needs of different stakeholders and considering their capacity to absorb risk, our research contributes to effective disaster financial risk management for earthquake-prone areas.