Learning from Catastrophes: Strategies for Reaction and Response

8. Hedging Against Tomorrow’s Catastrophes: Sustainable Financial Solutions to Help Protect Against Extreme Events

Erwann Michel-Kerjan

The Wharton School, University of Pennsylvania (United States) and École Polytechnique (France)

Overview

Two-thirds of the 25 most costly insured catastrophes in the past 40 years have occurred since 2001. Is this a sign of what the twenty-first century has in store for us? Most likely, because of the increasing concentration of population and value in high-risk areas, as well as a change in weather patterns toward more extreme events. This poses a real challenge as to who will provide financial protection against future large-scale risks, if such protection is indeed available. Although governments and traditional ...