Disaster risk perception, as well as risk appraisal, play a pivotal role in making the disaster risk reduction policy. This study examines the actual vs perceived drought risks by constructing risk indices at the household and expert levels using survey data from the lower Teesta River Basin in northern Bangladesh. Survey data were collected from 450 farmers based on the structural questionnaire. A composite drought risk index was developed to understand households’ perceived and actual risks in the designated areas. The results show that the actual and perceived risk values differ significantly among the three designated sites of Ganai, Ismail, and Par Sekh Sundar. The risk levels also differ significantly across the household’s gender, income, occupation, and educational attainment. People with poor socio-economic status are more prone to drought risk than others. Results also reveal that the mean level of perceived risk agrees well with the actual risk; females perceive comparatively higher risk than males. Expert views on drought risk are similar to the individual household level perceived risk. The outcomes of this study would help the policy-makers and disaster managers to understand the concrete risk scenarios of the study areas and to take timely and appropriate disaster risk reduction actions for ensuring a drought-resistant society.