We review the definitions, population trends, and characteristics of megacities. Characteristics of megacities are, apart from their size, their complexity in terms of administration, infrastructure, traffic, etc., and at the same time the speed of change. Vulnerabilities and risk potential are discussed using the examples of Mexico City and Mumbai. We present the experience accumulated in the 6 years work of the Earthquakes and Megacities Initiative (EMI, http://www-megacities. physik.uni-karlsruhe.de/) with more than 20 large cities around the world, mostly located in the developing world. On this background we analyze obstacles that keep megacities from developing an efficient approach towards disaster mitigation and define a strategy that might overcome these problems. The key element of this strategy is the development of a Disaster Risk Management Master Plan (DRMMP) for cities. Currently the Istanbul Earthquake Master Plan (IEMP) serves as best example for an appropriate strategy for disaster reduction in megacities.Keywords Megacity AE Urbanization AE Vulnerability AE Disaster mitigation AE Risk management master plan Trends in urbanizationThe world has experienced rapid urbanization during the past few decades. While in the 1950s approximately 18% of the world's population was living in urban areas, this

Insurance‐linked securities can benefit both issuers and investors; they supply insurance and reinsurance companies with additional risk capital at reasonable prices (with little or no credit risk), and supply excess returns to investors that are uncorrelated with the returns of other financial assets. This article explains the terminology of insurance and reinsurance, the structure of insurance‐linked securities, and provides an overview of major transactions. First, there is a discussion of how stochastic catastrophe modeling has been applied to assess the risk of natural catastrophes, including the reliability and validation of the risk models. Second, the authors compare the risk‐adjusted returns of recent securitizations on the basis of relative value. Compared with high‐yield bonds, catastrophe (“CAT”) bonds have wide spreads and very attractive Sharpe ratios. In fact, the risk‐adjusted returns on CAT bonds dominate high‐yield bonds. Furthermore, since natural catastrophe risk is essentially uncorrelated with market risk, high expected excess returns make CAT bonds high‐alpha assets. The authors illustrate this point and show that a relatively small allocation of insurance‐linked securities within a fixed income portfolio can enhance the expected return and simultaneously decrease risk, without significantly changing the skewness and kurtosis of the return distribution.

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The Philippines is one of the most disaster-prone countries in the world due to its hazard-prone location and vulnerable population. If it is to avoid a repeat of the loss of lives and devastation in every disaster, it must plan and manage more effectively, the further growth of its towns and cities as well as the natural environment. This can be achieved through disaster risk reduction-oriented planning and management. This article presents the challenges and issues that need to be addressed in planning for high-risk, low-income areas in the Philippines, and presents as an example, a redevelopment planning project of the community of Barangay Rizal in Makati City. The discussion highlights the hazards, vulnerabilities, socio-economic and other critical considerations in the area, and presents possible actions to reduce the risk and improve the socio-economic condition of the project site. The uniqueness/value of this project is that it addresses the challenges of making an existing low-income built-up community disaster-resilient. The lessons from and the replication of this project are relevant not only to the Philippines towns/cities but also to similar lowincome, high-density communities in other developing countries.