Editors' Summary

Natural catastrophes and terrorism risks are more threatening than ever. Associated damages increase yearly, and traditional compensation solutions have shown their limitations. Capital markets have been hailed as the new solution for dealing with these catastrophes, but the current financial crisis has cast a doubt on their potential. However, a number of capital market instruments are proving resilient to the crisis, due to the decorrelation of insurance and financial risks and to their general attractiveness in comparison with other forms of securitization. Is there a future for capital market instruments to complement or partially replace traditional compensation mechanisms?