Insuring Carbon Restraint: Captive Insurance and Parametric Solutions

Dr. Marcus Schmalbach, CEO of RYSKEX, joins The Edge of Risk by IRMI for an in-depth conversation on how captives and parametric risk transfer are driving innovation in climate-related risk management. The discussion centers on the Arx Veritas "carbon-in-the-ground" model, a pioneering approach that monetizes environmental restraint by leaving coal unmined.

Dr. Schmalbach explains how this restraint is transformed into a measurable, tradable asset through blockchain verification, satellite imagery, legal title documentation, and other independent data sources. The captive structure—paired with clearly defined parametric triggers tied to legal and environmental events—provides the financial credibility necessary to attract investors and satisfy regulators.

The podcast episode also explores why third-party validation is essential to eliminating moral hazard, the decision to domicile the captive in Connecticut, and how similar insurance-wrapped carbon credit models could scale into oil, gas, and rare earth minerals. Dr. Schmalbach offers insight into the paradigm shift risk professionals must make to see insurance not only as a tool for risk transfer but also as a trust mechanism for emerging markets like the carbon economy.