The aim of this paper is to present the first results of a research project entitled: Strengthening Local Authorities in Risk Management (SLARIM). The main objective of this project is to develop a methodology for spatial information systems for municipalities, which will allow local authorities to evaluate the risk of natural disasters in their municipality, in order to implement strategies for vulnerability reduction. The project concentrates on medium-sized cities in developing countries, which do not yet utilize Geographic Information Systems in their urban planning, and which are threatened by natural hazards (such as earthquakes, flooding, landslides and vol-canoes). The methodology concentrates on the application of methods for hazard assessment, elements at risk mapping, vulnerability assessment, risk assessment, and the development of GIS-based risk scenarios for varying hazard scenarios and vulnerability reduction options, using structural and/or non-structural measures. In the development of elements at risk databases use is made of interpretation of high-resolution satellite imagery, combined with extensive field data collection, using mobile GIS. Although the methodology is primarily designed to assist municipalities in the decision-making regarding vulnerability reduction strategies, the resulting databases are designed in such a way that they can also be utilized for other municipal activities. Within the project a number of case study cities have been identified. Here results are presented on earthquake loss estimation for the city of Lalitpur in Nepal, for buildings and for population losses. Databases have been generated of the buildings of the city, and of the sub-surface conditions. Soil response modeling was carried out and vulnerability curves are applied to estimate the losses for different earthquake scenarios.