Method, System, and Apparatus to Couple Physical and Financial Risks and Risk Measures to Mitigate Risk of Catastrophic Damage to Physical Locations

摘要

Described are methods and systems, including computer program products, for securitizing catastrophic risk. A computing device receives financial instrument data including a premium amount and a coupon amount, where the financial instrument reflects a financial risk that corresponds to one or more physical risks. The computing device determines a first expected loss associated with the financial risk reflected in the financial instrument, and determines a second expected loss associated with the financial risk reflected in the financial instrument where the financial risk is adjusted to compensate for risk-reducing measures and/or risk-contributing measures. The computing device determines a differential between the first and second expected losses. The computing device calculates a credit to parties responsible for the risk-reducing measures and calculates a debit to parties responsible for the risk-contributing measures based upon the differential. The computing device adjusts the premium and/or the coupon based upon the credit and/or the debit.