There is multitude of factors that must be taken into consideration when trying to determine social and economic development. In recent years, one of these factors that had a growing impact was represented by natural catastrophes. Lately floods increased in intensity, frequency and were responsible for more losses than any other natural phenomena in Romania. At international level, managing the risk of floods became a top priority for insurance companies and governments alike. There are however a series of factors which make catastrophe risk unsuitable to be covered by traditional insurance. Within this article, we try to address a more suitable approach on the matter represented by catastrophe bonds.

catastrophe bonds, floods risk, securitization, financial innovation, ART