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This special issue assembles selected papers of an international seminar on "Financial Risks of Natural Hazards: Markets and the Role of the State" held on May, 5-6, 2007 at the University of Innsbruck, Austria. The discussions in this seminar focused on two key issues: Strengthening the role of private parties to bear and effectively respond to natural hazards and mobilizing the potential of financial markets to spread the economic risks of natural disasters.