The economic repercussions of natural disasters have become increasingly severe. The natural catastrophes caused between 2017-2019 combined economic damages of about USD 600 billion around the world, more than the annual GDP of Sweden. Prof. Dr. Alexander Braun (I.VW-HSG, Institute of Insurance Economics at the University of St.Gallen), together with Julia Braun (also I.VW-HSG, not related) and Prof. Dr. Florian Weigert of the Université de Neuchâtel examined whether hurricane risk affects stock prices. They developed a theory for a hurricane risk premium on stocks and tested its implications in their recent study (published on SSRN) empirically.
Image: Adobe Stock / Mike Mareen