Index Insurance Forum

Risk Diversification and Up-Scaling Potential - Italy

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The development of sustainable insurance solutions requires  thorough risk assessment, modelling and layering. Agricultural and climate risks are mainly of a systemic nature, i.e. they  affect a large geographic area or large parts of the population simulta neously. If the insured risk is not adequately spread, one catastrophic event can threaten the viability of the whole scheme. To lower covariate risks, the portfolio thus needs to be diversified  in terms of crops, type of risks, and different geographical regions.