Defense mechanism formation for the Arctic BRI project transport infrastructure via parametric CAT bonds

The BRI (Belt and Road) project is the vastest infrastructure initiative connecting different regions through China’s investment in transport networks and infrastructure. However, the project faces significant geopolitical risks that could significantly influence the efficiency and sustainability of traditional transport corridors. This article analyzes the risks associated with natural disasters for the Arctic BRI project, discusses the possibilities of its protection using insurance derivatives (insurance-linked securities, ILS) in general, and CAT bonds (parametric catastrophe bonds) in particular. The study includes a decomposition of natural disaster risks in the context of the Arctic BRI transport corridor linking China and European countries, and explores the possibilities of using parametric CAT bonds as a financial instrument to mitigate the impact of these risks.