Using risk transfer to achieve climate change resilience

This report fills a knowledge gap in the increasingly urgent public dialogue around weather and catastrophe risk in a world with a changing climate. The report is one of the first to comprehensively examine how governments, water utilities, transit agencies, corporations and small farmers are using risk transfer instruments—such as catastrophe bonds and weather-risk transfer contracts—to adapt to climate change. The report discusses opportunities to expand the use of risk transfer for adaptation and details key challenges in this still emergent market. Moreover, it explores risk transfer for climate adaptation and resiliency in the developed and developing worlds.

The report provides three key takeaways:

1. With support from development banks and donor countries, many developing nations are incorporating risk transfer into their adaptation strategies.  
2. More infrastructure managers are using risk transfer.
3. Many corporations are considering risk transfer for climate change adaptation.

As climate change drives more interest in mitigating and hedging growing risk exposure, and as word gets out how industries like electric power, agriculture, and renewable energy have hedged weather risks in a productive way for over a decade, it is a reasonable hope and expectation that weather-risk transfer and catastrophe coverage can be successfully and cost-effectively used for climate change adaptation by a wide range of public and private organizations.