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In the last few decades, the frequency and intensity of extreme weather events have increased in most parts of the world including Canada because of global warming. The global warming in Canada is about double the magnitude of global warming; therefore, policymakers are concerned about the potential significant impact of the weather catastrophes on the economy and financial sector. The purpose of this study is to explore the impact of weather catastrophes on the Canadian banking sector.

Using a sample of banking firms from Canada over the period 1988–2019, the present study estimates different econometric techniques to investigate the impact of weather catastrophes on the risk and performance of Canadian banks.

Analyses of the study do not find a significant impact of the weather catastrophes on the performance of the Canadian banks; however, it has helped banks to lower their risk level and improve stability due to proactive risk management. The findings of this study are not consistent with concerns of the policymakers about climate risk to the Canadian bank sector. More sector-specific research and policy initiatives are recommended to minimize the future financial risk of the increased frequency and intensity of natural disasters.

The study contributes to support the notion that the climate risk of banks is protected with insurance and reconstruction activities provide more banking opportunities.

Due to climate change and an increasing concentration of the world’s population in vulnerable areas, how to manage catastrophe risk efficiently and cover disaster losses fairly is still a universal dilemma.

This paper applies a law and economic approach.

China’s mechanism for managing catastrophic disaster risk is in many ways unique. It emphasizes government responsibilities and works well in many respects, especially in disaster emergency relief. Nonetheless, China’s mechanism which has the vestige of a centrally planned economy needs reform.

I propose a catastrophe insurance market-enhancing framework which marries the merits of both the market and government to manage catastrophe risks. There are three pillars of the framework: (i) sustaining a strong and capable government; (ii) government enhancement of the market, neither supplanting nor retarding it; (iii) legalizing the relationship between government and market to prevent government from undermining well-functioning market operations. A catastrophe insurance market-enhancing framework may provide insights for developing catastrophe insurance in China and other transitional nations.

First, this paper analyzes China’s mechanism for managing catastrophic disaster risks and China’s approach which emphasizes government responsibilities will shed light on solving how to manage catastrophe risk efficiently and cover disaster losses fairly. Second, this paper starts a broader discussion about government stimulation of developing catastrophe insurance and this framework can stimulate attention to solve the universal dilemma.

The purpose of this paper is to study how variations in weather affect demand and supply chain performance in sport goods. The study includes several brands differing in supply chain structure, product variety and seasonality.

Longitudinal data on supply chain transactions and customer weather conditions are analysed. The underlying hypothesis is that changes in weather affect demand, which in turn impacts supply chain performance.

In general, an increase in temperature in winter and spring decreases order volumes in resorts, while for larger customers in urban locations order volumes increase. Further, an increase in volumes of non-seasonal products reduces delays in deliveries, but for seasonal products the effect is opposite. In all, weather affects demand, lower volumes do not generally improve supply chain performance, but larger volumes can make it worse. The analysis shows that the dependence structure between demand and delay is time varying and is affected by weather conditions.

The study concerns one country and leisure goods, which can limit its generalizability.

Well-managed supply chains should prepare for demand fluctuations caused by weather changes. Weekly weather forecasts could be used when planning operations for product families to improve supply chain performance.

The study focuses on supply chain vulnerability in normal weather conditions while most of the existing research studies major events or catastrophes. The results open new opportunities for supply chain managers to reduce weather dependence and improve profitability.

This paper illustrates how weather derivatives indexed to forecasts of famine can be designed and used by operational agencies and donors to facilitate timely and reliable financing, for effective emergency response to climate‐based, slow‐onset disasters such as drought. We provide a general framework for derivative contracts, especially in the context of index insurance and famine catastrophe bond, and show how they can be used to complement existing tools and facilities in drought risk financing through a risk‐layering strategy. We use the case of arid lands of northern Kenya, where rainfall proves a strong predictor of widespread and severe child wasting, to provide a simple empirical illustration of the potential contract designs.

The purpose of this paper is to outline a pricing formula for the valuation of catastrophic (CAT) bonds as applied to multiple trigger drought risks in Kenya.

The valuation model is designed around the multiple triggers of the Mexican Catastrophe bonds, but the valuation model is based on Jarrow’s (2010) closed form CAT Bond Pricing model. The authors outline the model structure, the multiple tranches with rainfall triggers, and simulate the model using Monte Carlo methods. Data input was synthesized from historical rainfall data in Kenya’s Moyale region as well as prevailing LIBOR and rates and conventional coupons.

The authors compute the valuation model using Monte Carlo techniques. The authors found the pricing method to be robust and consistent under various parameter settings including trigger levels, time after launch, recovery rates, coupon spreads, and zero coupon curves. For example the higher the trigger rates, the lower will be the bond price at issue. With 50 percent recovery the CAT bond at issue would be around $702 with a high triggers and 976 with low triggers, but the valuation changes with parameters.

As far as the authors know the use of multiple trigger CAT bonds has been very limited in practice. The valuation formula and methods outlined in this paper show how CAT bonds can be effectively designed to address CAT covariate risks in developing agricultural economies.

This paper examines CAT bonds to investigate multi-trigger rainfall risks in Kenya. The paper shows how CAT bonds can be designed to meet specific and CAT risks. Using Jarrow’s (2010) closed form solution this paper is one of the first to apply it to the macro-management of agricultural risks.

The US insurance industry has long faced the spectrum of large unexpected losses from natural catastrophes such as hurricanes and earthquakes. However, the September 11, 2001 terrorist attack clearly demonstrated a new form of catastrophic risk of man‐made origin. The damages in property and life are now well known as estimates of insured losses deriving from this event range from $40 to $54 billion. The 9/11 terrorist attacks renewed the capacity problem faced the insurance industry in the underwriting of large catastrophic risk. In that regard, this paper explores the feasibility of capital market alternatives to the conventional insurance mechanism, and analyses whether the capital market could provide extra capacity to absorb terrorism risk.

The recent trend of integrated risk management has resulted in corporations reassessing their risk management practices. Insurance derivatives and insurance‐linked securities are emerging as alternatives or complements to traditional resisurance capacity. Despite its theoretical benefits, the market for insurance‐linked transactions has not matured, due to problems of information asymmetry and lack of transparency. This article proposes a solution to resolve the conflicting interests preventing insurers/reinsurers and investors from more widely trading insurance risk.

Novel micro‐insurance schemes are emerging to help the poor better deal with droughts and other disasters. Climate change is projected to increase the intensity and frequency of disasters and is already adding stress to actual and potential clients of these schemes. As well, insurers and reinsurers are increasingly getting worried about increasing claim burdens and the robustness of their pricing given changing risks. The purpose of this paper is to review and suggest ways to methodologically tackle the challenges regarding the assessment of drought risk and the viability of index‐based insurance arrangements in the light of changing risks and climate change.

Based on novel modeling approaches, the authors take supply as well as demand side perspectives by combining risk analysis with regional climate projections and linking this to household livelihood modeling and insurance pricing. Two important examples in Malawi and India are discussed, where such schemes have been or are about to be implemented.

The authors find that indeed micro‐insurance instruments may help low‐income farming households better manage drought risk by smoothing livelihoods and reducing debt, thus avoiding poverty traps. Yet, also many obstacles to optimal design, viability and affordability of these schemes, are encountered. One of those is climate change and the authors find that changing drought risk under climate change would pose a threat to the viability of micro‐insurance, as well as the livelihoods of people requesting such contracts.

The findings and suggestions may corroborate the case for donor support for existing or emerging insurance arrangements helping the poor better cope with climate variability and change. Furthermore, a closer linkage between climate and global change models with insurance and risk management models should be established in the future, which could be beneficial for both sides.

In these ever challenging times, conventional property decision theory appears inadequate to deal with black swan events: those unforseen, rare and extreme natural and man-made disasters. The paper aims to discuss these issues.

This research maps, characterises and assesses these threats into: Known Knowns, Known Unknowns and Unknown Unknowns categories. Whereas, Known Knowns events can be managed and Unknown Unknowns events are difficult to even identify, those black swan Known Unknowns events that impact on a location, can be modelled based on available past and comparable evidence.

As a starting point, black swan management tools can utilise available prediction-based scale indices to highlight the possibility of these extreme events occurring in locations, and so form an important consideration for property asset managers in their decision-making process.

For property asset managers, this black swan management research attempts to identify, record and include those outlier events that directly impact on their property decision-making process. This can be undertaken by providing predictions as to the future occurrence of Known Unknown black swan events. These extreme events need to form an important part of a property asset manager's decision-making process. If overlooked, black swan events can have disastrous consequences for the valued client – building owner.

The impact of climate disasters (e.g., floods, storms, or landslides), which are generally of low intensity and high frequency, should not be overlooked in developing countries. Global experiences related to the damage due to these disasters indicate that such events can be devastating in communities that are vulnerable to hazardous impacts. Cumulative effects of climate disasters are a sign of a potential catastrophe. Moreover, the recent increase in these events poses additional issues that increase the cost of local public administration, including emergency operation and infrastructure recovery. This chapter explains key problems related to climate disasters that are increasing, particularly in the local area of developing countries, and clarifies the need to incorporate climate disaster risk reduction into public development planning and practice. The chapter also provides descriptions of the research location, approaches of the study, and the structure of this book.