As a low-income country, Pakistan is particularly vulnerable to various natural and human-induced disasters, which have significant consequences for both the environment and human life. A substantial share of the provincial budget is allocated to disaster response and recovery efforts. Prioritizing investment in disaster risk reduction (DRR) is essential to protect lives and assets. Although there is a complex relationship between investments made before and after disasters and their effectiveness in DRR, this dynamic remains insufficiently understood in Pakistan’s Khyber Pakhtunkhwa (KP) province. The current study was designed to analyze the developmental budgeting for DRR in the financial years 2000–2022 in KP province. The Sen’s Slope Estimator and modified Mann-Kendall tests were used to determine the significance trend, while the correlation coefficient test was used to find the correlation between investment in DRR and disaster-induced damages such as deaths, injuries and houses damaged. The study findings reveal that the occurrence of disasters influences post-disaster spending in the KP province, with a significant negative correlation between expenditure and disaster-related damages, implying that increased DRR investment has significantly reduced the consequences of disasters. To minimize vulnerability to future disasters, the province should integrate risk-sensitive planning across all sectoral departments at local, district, and provincial levels, guided by a risk-informed development approach. This proactive strategy would embed disaster resilience within developmental activities, ensuring that each sector aligns with principles of risk reduction and sustainable growth.