Dealing with the unknown

Speaking ahead of an address to the Munich Security Conference, [Bill Gates,] the richest man in the world said that while governments are concerned with the proliferation of nuclear and chemical weapons, they are overlooking the threat of biological warfare. Bioterrorism could kill more people than nuclear war, Bill Gates to warn world leaders, 'The Telegraph', 17 February

One of the strengths of the Social Policy Bond principle is that we do not need to specify in advance the exact nature of the problem we want to solve. Many potential problems could arise from our denser, more linked, populations and higher technology. These are difficult even for a well-resourced government, or indeed any single big organisation, to anticipate, let alone do much to forestall. Hurricanes, tsunamis or pandemics are only a subset of a range of and disasters that threaten mankind. Others include the risks arising from new biological advances or scientific experiments that concentrate energy, or natural disasters such as asteroid impacts or volcanic super-eruptions. These threats are in addition to the 'known unknowns' of more widely understood catastrophes. Social Policy Bonds are versatile: depending on society's wishes, and the views of the bonds' backers, bonds could target any type of disaster that, say results in the deaths of 10 000 people within one week or its occurrence, however caused and in whatever part of the world.

Holders of such Disaster Prevention Bonds, would be able to redeem them only after a sustained period of, say, ten years, during which no such disaster has occurred. They would have incentives to anticipate potential disasters and to work to prevent them and mitigate their effects on human life. Today's disaster prevention policies are mostly carried out by bodies anticipating 'known' types of disaster, and mitigation strategies are often merely reactive. As well, few have the types of incentives that Disaster Prevention Bonds would put in place, that would reward the sustained absence of a disaster.