Catastrophic risks and the pricing of catastrophe equity put options.

In this paper, after a review of the most common financial strategies and products that insurance companies use to hedge catastrophic risks, we study an option pricing model based on processes with jumps where the catastrophic event is captured by a compound Poisson process with negative jumps. Given the importance that catastrophe equity put options (CatEPuts) have in this context, we introduce a pricing approach that provides not only a theoretical contribution whose applicability remains confined to purely numerical examples and experiments, but which can be implemented starting from real data and applied to the evaluation of real CatEPuts. We propose a calibration framework based on historical log-returns, market capitalization and option implied volatilities. The calibrated parameters are then considered to price CatEPuts written on the stock of the main Italian insurance company over the high volatile period from January to April 2020. We show that the ratio between plain-vanilla put options and CatEPuts strictly depends on the shape of the implied volatility smile and it varies over time.

Assessing factors that influence waste management financial sustainability.

This article examines the financial sustainability of waste management activities to understand whether and how choices oriented toward environmental protection and contextual factors influence waste management companies' revenues and costs, which, in turn, affect their financial sustainability and, thus, their ongoing viability. To achieve this purpose, a three-year empirical analysis on 880 Italian municipalities was conducted. Financial sustainability was evaluated with reference to waste management companies working in these territories, and a set of quantitative and qualitative data was considered to investigate possible influencing factors. The results show that separate waste collection may positively influence companies' financial performance, while municipalities' territorial extension negatively impacts profitability. Lastly, there is no evidence of a relationship between companies' financial sustainability and the potential presence of waste disposal plants or the geographical areas in which they operate. For the analyzed companies, thus, it seems that it would be more convenient to expand business by boosting separate waste collection activities than by enlarging the territories served. These findings can support firms' decisions regarding environmental and financial issues, both of which are crucial for long-term sustainability. It can also help policy makers detect appropriate tools to support companies in implementing European Union waste management targets.