Abstract

The global economy faces a substantial obstacle in the form of climate change, with developing nations experiencing a disproportionate burden of its consequences. This paper examines the intricate dynamics of climate derivatives and the methods through which risks are transmitted, examining their significant impact on investment decision-making in developing nations. The study seeks to assess the current state of climate risk management by a comprehensive examination of existing literature, in-depth analysis of case studies, and meticulous evaluation of regulatory measures, all within a comprehensive framework. The research integrates both qualitative and quantitative data via the use of a mixed-methods approach. The findings illustrate the intricate and varied character of climate risk in developing nations, underscoring the pressing need for resilient risk management strategies. Regulatory frameworks have a crucial role in influencing the adoption and effectiveness of risk transfer mechanisms in the investment environment.
The study emphasizes the critical significance of climate derivatives in enhancing resilience against uncertainties arising from climate change. This paper provides pragmatic recommendations for policymakers, investors, and stakeholders to efficiently integrate climate derivatives into their investment strategies. The study highlights essential findings and promotes the use of flexible regulatory frameworks, urging the integration of climate risk management techniques into policy deliberations. These observations enhance the ability to make well-informed policy choices, promoting a more robust and sustainable investment climate in emerging countries. To summarize, this study highlights the significant impact of climate derivatives and risk transfer mechanisms on investment decision-making in emerging countries. The paper provides a holistic viewpoint on sustainable and resilient development by combining theoretical ideas, practical applications, and regulatory issues.