Local governments face uncertainty when allocating resources for flood risk management, particularly in open-pit mining areas where sediment-laden runoff intensifies floods. Climate variability and increasingly intense precipitation peaks complicate the prioritization of interventions that protect people and infrastructure while safeguarding business continuity under limited budgets. To support this decision-making process a system dynamics model is developed to evaluate local public budget allocation and its effects on prevention, emergency response, and recovery. The model incorporates climate variability as an exogenous disturbance and assesses robustness and resilience through key performance indicators, including response costs, operational requirements, deprivation costs, and business continuity. It is validated through structural tests and expert consultation and applied illustratively to a mining community in Colombia. Computational experiments compare alternative emergency management budget allocation policies. A policy allocating a larger budget share to preventive channel maintenance while sustaining assistance for affected populations yields superior robustness, resilience, business continuity, and lower deprivation costs than alternative strategies. The model supports local decision-makers in public administration and disaster risk management in designing integrated budget allocation policies that balance preventive and reactive spending; jointly account for impacts on people, infrastructure, and business continuity; and strengthen flood risk management.