Dr Sovan Mitra, Senior Lecturer in Accounting and Finance at the University of Westminster, has been awarded the prestigious Best Paper Award at the Economic Competitiveness and Sustainability (ECOS) Conference 2025. Dr Mitra’s paper showcases a model that helps insurers cushion the financial impact of natural disasters, which is important to achieve more reliable support for renewable energy.
The winning paper, titled Incorporating Idiosyncratic Risk Factors into CAT Bond Pricing: A Machine Learning Approach, was co-authored with researchers Florian Horky, Boru Ren and Brian Lucey and explores how machine learning can improve the pricing of catastrophe (CAT) bonds. CAT bonds are a type of financial safety net for insurers, helping them manage the costs of natural disasters by sharing the risk with investors. However, Dr Mitra’s research highlights that these bonds are not always priced as efficiently as they should be. While they are meant to be valued solely based on the likelihood of catastrophic events occurring, other factors, such as investor trust in specific insurers, also influence pricing.
Using machine learning, the study analysed various hidden risk factors affecting CAT bond prices and tested different models to see which predicted prices most accurately. The findings show that while some models successfully capture these extra risks, others fall short. This suggests room for improvement in how the market values CAT bonds.
This research has real-world benefits. By improving CAT bond pricing with machine learning, insurers and investors can create a more efficient and stable market, as it reduces the chances of under-pricing or over-pricing. Policymakers can use these findings to make the CAT bond market fairer and help ensure that when disasters strike, the financial support is there to help communities recover.
The authors were presented with the award at the ECOS Conference 2025 which took place in Brno, Czech Republic, between 27-28 March. The Conference brought together global experts in economics and sustainability and encouraged discussions on innovative financial strategies.
Dr Mitra said: “This shows how research can be used to provide impactful results for climate change and commercially beneficial work for industry. We are grateful to the School of Accounting and Finance and Westminster Business School in supporting our research.”
This research directly contributes to the United Nations Sustainable Development Goal (SDG) 11: Sustainable Cities and Communities. Since 2019, the University of Westminster has used the SDGs holistically to frame strategic decisions to help students and colleagues fulfil their potential and contribute to a more sustainable, equitable and healthier society.
Find out more about studying Accounting and Finance courses at the University of Westminster.
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