Koshi is a trans-boundary river that flows in China, Nepal and India. The river originates from Tibet in China and flows through Nepal and India covering 87,481 km2 area and provides livelihoods for almost 40 million people, most of who depend on subsistence agriculture. The river is also a major source of sorrow for downstream population of Nepal and India due to occasional catastrophic flooding and intense flow of debris. The three countries through which the river passes have their own policies that may be adequate in compartment, but lack in integrated approach and therefore unable to optimize on this vast resource on a basin scale and unable to develop integrated plan to fight with water related hazards. These limitations are leading to high prevalence of poverty and food insecurity in the populated areas of the basin in these three countries. The on-going impact of climate change has further worsened the problem due to more extreme weather events like frequent flood and drought hazards in the basin which ultimately threatened the livelihood options of the Koshi dwellers. In the context of trans-boundary basin, a policy adopted by the upstream could generate either positive or negative externality to the downstream and there is a policy vacuum in the context of whole basin. In this backdrop, this chapter discusses, national and regional policies, institutional frameworks, bi-lateral and multi-lateral arrangements as main drivers in addressing or failing to address the issues of disaster risk and livelihood vulnerabilities of communities living in the Kosi basin. This chapter calls for a better understanding and analysis of water, climate change, agricultural and disaster risk reduction policies related institutional frameworks is essential so that a comprehensive and coordinated institutional approach to optimize the basin’s natural resources, reduction in hazard impacts and overall livelihood improvement can be achieved. This chapter also calls for effective management and regional cooperation in the Koshi river basin through continuous dialogue and for just water resource sharing among the riparian countries.