How Much Difference in Earthquake Risk among China’s Areas: A Study based on Pricing a Seismic Catastrophe Bond

: According to China's earthquake magnitude data from 1970-2009, we employed the extreme value distribution model to analyze the difference of annual maximum magnitude between China's major earthquake-prone provinces. By a stochastic simulation method, we give an example of pricing catastrophe bonds in earthquake-prone areas. It shows that the potential risk varied widely in different regions. As a conclusion, we suggest establishing a multi-level seismic risk financing mechanism, and it should be established in some special areas firstly.