Risk glossary

 

Weather-linked bonds

The payout of weather-linked bonds, commonly known as nature-linked bonds, is linked to weather conditions. The return on the nature-linked bond is pegged to a suitable meteorological index. A trigger level is defined, which remains active during the exposure period. If this trigger is hit by the index, the issuer of the bond is allowed to default. Suitable indexes might include rainfall or temperature. Insurance companies commonly issue these bonds to hedge against high weather damage claims.

  • LinkedIn  
  • Save this article
  • Print this page  

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: