To identify and prepare for natural and manmade catastrophes, countries should take risk management steps including measures to finance losses before an event and creation of a national risk officer, a new report advises.
The study by Swiss Re suggests a country risk officer could be responsible for managing a prioritized risk landscape, taking a holistic approach to risk before events occur such as earthquakes, storms, droughts, floods, pandemics, energy and food security problems, financial crises, and war or terrorism.
Swiss Re's analysis is contained in a focus report on country risk management.
Nationwide risk management, the company said, was one of the topics at Swiss Re's annual meeting at the World Economic Forum yesterday in Davos, Switzerland.
The firm said the meeting under the title "Financing the Risks of Mother Nature–actions today to mitigate the impacts of tomorrow," drew political and business leaders to discuss new solutions for financing the natural catastrophe risks.
Swiss Re reported its chief executive officer, Jacques Aigrain, opened a breakfast session by reminding participants that the financial crisis had overshadowed major disasters in 2008.
"Hurricanes in the U.S. and the Caribbean triggered very high losses; China was shattered by a major earthquake; Myanmar suffered from cyclones leaving 138,000 people dead or missing; and Brazil experienced its worst flooding ever-a country many deemed to have low exposure to natural disasters," said Mr. Aigrain.
To manage these risks effectively, "We need private-public partnerships," Mr. Aigrain advised.
Swiss Re said that from the company's perspective, Inter-American Development Bank (IDB) "is the right partner for discussing new solutions to manage nature-related risks."
In his keynote speech, Luis Moreno, president of the IDB, emphasized the importance of societies adapting to a changing environment and developing new financing mechanisms.
Christian Mumenthaler, Swiss Re head of risk management and chief risk officer, making the case for a dedicated country risk officer, said, "More than ever, an all-hazard approach is needed to implement effective prevention and adaptation strategies."
Former President Bill Clinton, who delivered the closing address, said the world will have to deal with the consequences of global warming for much longer than expected, even if we do manage to reduce emissions by 80 percent by 2050. He made particular reference to the agricultural sector, which had been neglected in development policies in the past 20 years.
In the developing world, a boost in agricultural production is needed, he said, adding that insurance schemes could provide farmers with financial stability.
In the developed world, the current economic crisis might lead to a carbon footprint reduction, said Mr. Clinton, but he added that it was not a sustainable way of addressing the challenge. The former president's conclusion was very optimistic: he said he truly believed that economic growth and emissions reduction are simultaneously possible.
In its report on country risk management, Swiss Re said forward-looking and comprehensive risk identification and disclosure are needed if limited public resources are to be allocated in the best possible way.
The report concluded that a country risk officer could lend weight to the process of systematic risk management and give it a public face.
Supported by a portfolio of mitigation options, the country risk officer would be in a position to build on the work already undertaken by governments. They could also help to improve collaboration across the public sector, private businesses and academia.
They could play an important role in developing new partnerships to transfer risks and finance economic losses and would be ideally positioned to coordinate global efforts in the face of a multitude of risks.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.