It has been two years and six months since the World Health Organization called an end of the COVID-19 pandemic, but the debate around the role of private market finance seems to remain just as polarized as it did during the height of the outbreak.
This week’s Risky Science Podcast steps directly into one of the most uncomfortable conversations in risk finance : what happens when capital-market enthusiasm collides with real world economic priorities?
Dr. Susan Erikson—medical anthropologist, Simon Fraser University professor, and author of Investable!—joins the podcast to unpack the World Bank’s pandemic bonds and the broader financialization of global health.
Her perspective asks a deeper question for anyone modeling extreme events or structuring risk-transfer solutions: What if some forms of risk simply don’t behave like assets?
Dr. Erikson is not the only researcher asking these questions. According to research released by the University of Leeds earlier this year, despite bold claims there is little evidence these structures have ever delivered meaningful value for pandemic preparedness. In fact, when evaluated on actual performance:
- PEF pandemic bonds failed to pay out for Ebola, failed to pay out early for COVID-19, and ultimately delivered less funding than the premiums and fees paid to investors.
- Vaccine bonds (IFFIm) raised far less than promised while channeling substantial public money into private-sector interest payments and fees.
- Advance Market/Advance Purchase Commitments (AMCs/APCs) sped up development of some vaccines but also resulted in opaque pricing, large public subsidies, and oversupply of doses that were ultimately not needed.
Across the episode, Erikson challenges several long-held assumptions inside the ILS, structuring, and modeling community:
- Why health data is fundamentally different from catastrophe data, and why that mismatch matters for parametric triggers.
- What the pandemic bond experience reveals about externalities markets prefer not to carry.
- Why governments remain the de facto risk holders, even when private capital is invited into the system
For a sector increasingly looking to expand into “non-traditional” risks, Erikson’s work is a counterweight.
Dr. Erikson doesn’t argue against markets, but she does argue for clarity about what markets can and cannot solve, especially when the exposure is measured in human lives rather than rebuilt assets.
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