Dramatic events in the recent past have drawn attention to catastrophe risk management problems. The devastating terrorist attacks of September 11th, 2001 incurred the highest insured losses to date. Furthermore, a trend of increasing losses from natural catastrophes appears to be observable...

Catastrophe bonds (cat bonds) often use index triggers, such as, for instance, parametric descriptions of a catastrophe. This implies the problem of the so-called basis risk, resulting from the fact that, in contrast to traditional reinsurance, this kind of coverage cannot be a perfect hedge for...

We examine the opportunities for using catastrophe-linked securities (or equivalent forms of nondebt contingent capital) to reduce the total costs of funding infrastructure projects in emerging economies. Our objective is to elaborate on methods to reduce the necessity for unanticipated...