Catastrophic Risks and Insurance

image of Catastrophic Risks and Insurance

These proceedings, based on a conference held in November 2004 at OECD in Paris, present leading academic analysis as well as government and private sector information and experience-sharing on how governments and the financial and insurance sectors can deal with losses caused by terrorism, atmosperic perils, and other large-scale risks.



The Potential for New Derivatives Instruments to Cover Terrorism Risks

This chapter begins by a brief overview of the credit derivatives market and the structures of credit default swaps (which are highly relevant to our discussion of catastrophe-linked derivatives). It then looks at catastrophe-linked derivatives and two ideas for new instruments to cover terrorism risk—catastrophe risk swaps and swaptions—and some of the challenges and advantages to the development of these products.


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