Sovereign Catastrophe Bonds & Disaster Risk Insurance | World Bank Treasury - World Bank Group
Sovereign Catastrophe Bonds & Disaster Risk Insurance | World Bank Treasury - World Bank Group
Source: World Bank Group
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DW NOTE
The World Bank issues catastrophe bonds to transfer sovereign disaster risk to capital markets — a financial instrument that converts earthquake, hurricane, or pandemic exposure into tradable securities. When poor countries face climate shocks, bondholders take the loss instead of taxpayers funding emergency IMF loans. The structure works until it doesn't: in 2020, the World Bank's pandemic cat bond paid out $133 million to 64 countries only after COVID-19 had killed 2,500 people across multiple nations and spread to at least 16 countries — six weeks after the WHO declared a global emergency. The triggers are written by actuaries, not epidemiologists.