The main function of financial systems?

Is now clearly to allocate risk, instead of capital. What purpose serve catastrophe bonds if not diversifying risks? this one exemple might not be enough to argue the functional shift of an entire industry, but one has to note nevertheless that catastrophe bonds might have done well because they are not correlated to stock markets....where prices are supposed reflect all known information and rational market participants act accordingly. Rational actors of financial systems have to resort to gamble on natural disasters to diversify their portofolio, showing once more (as if we needed more proof by now) that financial markets are not efficient at reflecting fundamentals. 

Natural disasters as safe heaven from stock markets

Leonardo Da Vinci - Natural disaster

Betting on the likelihood of natural disasters has been one of the best investment since the financial crisis, after silver, gold, high-yield bonds from the US and EU countries. Catastrophe bonds are a fixed-income investements, but contrary to others, issuers do nothave to pay the full amount of the bond or the interest in the event of a natural disaster. 

Now get this: 

So why have cat bonds done so well in the last few years? Because they have practically no relationship to financial markets. This doesn't mean they're particularly safe: we've written before about the possibility of a bubble forming in the insurance industry. Then again, when the entire market can shift after a few comments from Federal Reserve chairman Ben Bernanke, as it did this week - or rests on the health of dubious bets from the financial industry - gambling on the likelihood of a natural disaster doesn't sound like such a bad idea. 

The stock market has become so unpredictable and so detached from economic fundamentals that natural disasters have become an alternative to it.