Webinar: Increasing countries’ financial resilience through global catastrophe risk pooling
Apr 27, 2023
In this webinar, Alessio Ciullo and Eric Strobl present their research on the benefits of global catastrophe risk pooling and how to design such pools to achieve maximum diversification benefits.
Extreme weather events can severely impact national economies, leading the recovery of low- to middle-income countries to become reliant on foreign financial aid, which is however slow and uncertain. Therefore, the Sendai Framework and the Paris Agreement advocate for more resilient financial instruments like sovereign catastrophe risk pools. These are financial instruments that exploit risk diversification to provide more affordable insurance policies and thus increase the financial resilience of the pools’ members.
Existing sovereign catastrophe risk pools – however - might not fully use their financial resilience potential because they were not designed to maximize risk diversification and because they pool risk only regionally. Alessio and Eric will first introduce a method to find the optimal sovereign risk pool, and will follow with a discussion on how they apply the method to assess the benefits of global pooling compared to regional pooling.
Video recording: Link