Toward Resilience to Nuclear Accidents: Financing Nuclear Liabilities via Catastrophe Risk Bonds

Ayyub, Bilal M, Pantelous, Athanasios A ORCID: 0000-0001-5738-1471 and Shao, Jia (2016) Toward Resilience to Nuclear Accidents: Financing Nuclear Liabilities via Catastrophe Risk Bonds. ASCE-ASME JOURNAL OF RISK AND UNCERTAINTY IN ENGINEERING SYSTEMS PART B-MECHANICAL ENGINEERING, 2 (4). 041005-.

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Official URL: http://dx.doi.org/10.1115/1.4033518

Abstract

<jats:p>In light of the 2011 Fukushima disaster, recent discussion has focused on finding the best nuclear storage options, maximizing the oversight power of global institutions, and strengthening safety measures. In addition to these, the development of dependable liability coverage that can be tapped in an emergency is also needed and should be considered thoughtfully. To succeed, financing is essential using special-purpose instruments from the global bond market, which is as big as US$175 trillion. Thus, in this paper, for the first time, a two-coverage-type trigger nuclear catastrophe (N-CAT) risk bond for potentially supplementing the covering of U.S. commercial nuclear power plants (NPPs) beyond the coverage per the Price Anderson Act as amended, and potentially other plants are proposed and designed worldwide. The N-CAT peril is categorized by three risk layers: incident, accident, and major accident. The pricing formula is derived by using a semi-Markovian dependence structure in continuous time. A numerical application illustrates the main findings of the paper.</jats:p>

Item Type:	Article
Uncontrolled Keywords:	nuclear power risk, catastrophe risk bonds, global market, liability, special-purpose, vehicle, two-coverage-type trigger, semi-Markov environment
Depositing User:	Symplectic Admin
Date Deposited:	05 Dec 2018 16:17
Last Modified:	14 Mar 2024 18:07
DOI:	10.1115/1.4033518
Related URLs:	Author Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3029585