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Can We Hedge an Investment Against A Potential Unexpected Environmental Disaster?
George Halkos1, Argyro Zisiadou1
1Laboratory of Operations Research, Department of Economics, University of Thessaly, Volos, Greece.
Economics of Disasters and Climate Change
|August 9, 2021
Summary
This study explores hedging techniques to protect investments from unexpected hazards like environmental disasters. It proposes catastrophe risk management strategies to minimize losses and enhance corporate and governmental trustworthiness.
Area of Science:
- Environmental Risk Management
- Financial Hedging Strategies
- Disaster Preparedness
Background:
- Traditional hedging methods may not suffice against unprecedented environmental disasters.
- The study reviews the evolution of hedging techniques specifically for catastrophe-related risks.
Purpose of the Study:
- To investigate viable hedging techniques for securing capital against unexpected hazards.
- To assess the applicability of traditional hedging against environmental disasters.
- To propose risk management and minimization strategies for post-disaster recovery.
Main Methods:
- Review of traditional and evolved hedging techniques.
- Analysis of catastrophe risk management frameworks.
- Use of mapping visualization to identify hazard-prone areas.
Main Results:
- Identified limitations of traditional hedging against environmental disasters.
- Proposed novel catastrophe risk management and minimization techniques.
- Demonstrated the utility of mapping for hazard identification.
Conclusions:
- Effective hedging strategies are crucial for financial security against environmental hazards.
- Integrated risk management approaches enhance resilience and trustworthiness.
- Proactive planning and visualization are key to mitigating disaster impacts.
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