Resilience bonds: A secret weapon against catastrophe

[...] Governments have improved at implementing policies that protect against some types of disasters. For example, zoning laws can restrict the population living in hurricane-prone areas. But it hasn’t been enough. From 2003 to 2013 alone, natural disasters caused $1.5 trillion in damages, killed more than 1.1 million people and affected more than 2 billion. At the same time, it’s not as if governments are finding they have more room in their budgets to clean up a crisis – or to build the resilience measures that could help prevent them.

Enter a new idea that could transform not only the global economy, but how disasters affect us: a resilience bond. As well as guaranteeing help to communities after a catastrophe, it would help fund projects and strategies they need to become less vulnerable to begin with. “Resilience bonds are, in my view, the next exciting and innovative frontier in infrastructure and resilience finance,” says Samantha Medlock, former senior advisor to the Obama White House on resilience and now senior vice president at Willis Towers Watson.

The concept is part of an overall trend, experts say, that could transform how communities work: as risk modelling has become more and more sophisticated, the private sector is getting closer to being able to turn not only risk, but resilience, into numbers.

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