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World Economic Forum: How catastrophe bonds help manage the risk of climate change

  • Extreme weather events around the world are on the rise as a consequence of climate change.
  • The market in catastrophe bonds could grow to $50 billion by the end of 2025.
  • Insurers use the securities to shield themselves against losses from consequences of climate change such as natural disasters.

Wildfires, hail storms and a deep winter freeze helped push insured losses from natural disasters to $40 billion in the first half of 2021, the highest level in a decade. With extreme weather events like these on the rise as a consequence of climate change, insurance companies are looking for new ways to protect themselves from the growing financial risk.


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