You’d think investors would see it coming: debt tied to weather risk can be volatile in the Atlantic hurricane season.

Catastrophe bonds, used by investors to bet against natural disasters, tend to drop substantially as storms approach populated areas.

While they can recover just as quickly, as they did last year when Hurricane Matthew did less damage than feared, seasonal analysis of the past decade shows they have dropped almost every November and December -- the tail end of the season.

As Hurricane Harvey heads toward landfall in Texas, it’s strengthening, and is forecast to become the worst storm to strike the region in more than a decade. Natural disasters that cause enough damage can cost cat bond investors some of their principal, as was the case after Hurricane Katrina in the U.S. in 2005 and an earthquake in Japan six years later. 

Investors in the securities get above-market yields in exchange for shouldering the risk of natural disasters. Cat bonds are typically issued by insurers or government agencies that want to spread their risks to the capital markets.