WCDRR in Sendai: looking towards a safer world

The Hyogo Framework sets the stage for the UN World Conference on Disaster Risk Reduction in Sendai, Japan. And Swiss Re is ready to play a role.

The UN Head of Disaster Risk Reduction, Margaretha Wahlström says that the private sector will soon be responsible for up to 80% of investment in all urban infrastructure.

That message is on the mind of those attending the third UN World Conference on Disaster Risk Reduction (WCDRR)  in Sendai, Japan. Swiss Re is there, leading the insurance sector's first dedicated public sector risk team.

Infrastructure investment helps build resilience

The Hyogo Framework, the UN's plan to reduce disaster losses, is the main topic of the conference.  Also up for discussion: how public-private partnerships can help make the Framework a reality.

"The current infrastructure needs are approximately USD 1 trillion per year.  Inactive funds of institutional investors amount to almost USD 70 billion," says Martyn Parker, Swiss Re Chairman Global Partnerships. He'll be at the 14-18 March event as part of the Swiss Governmental delegation along with Ivo Menzinger, Head Global Partnerships Asia.

"For those funds to be unlocked, regulators will need to do their bit to create enabling frameworks facilitating government-related infrastructure investment. We are suggesting the creation of a separate infrastructure asset class to make that happen."

A continuing commitment

Only 4% of the estimated USD 10 billion in annual relief and reconstruction efforts following natural disasters is devoted to prevention. Yet every dollar spent on resilience measures saves between USD 5 and USD 10 in terms of economic losses.  But most importantly, it also saves lives and livelihoods. Swiss Re is doing its part to make sure preparedness and prevention stay at the forefront.

"In September last year, we made a commitment at the UN Climate Summit, pledging USD 10 billion in insurance capacity to improve sovereign and sub-sovereign  climate-risk preparedness by 2020," Parker said. Up to 65% of climate risks can be averted through conscious risk management and cost effective resilience measures. "The insurance industry can help by offering our research and thought leadership to governments and communities to make this happen."  

"On average globally, only about  25% of the costs of catastrophes are insured: In emerging and developing economies it is often less than 10%," Menzinger added.  

"The establishment of healthy insurance markets is therefore another important element in the government toolbox, helping nations achieve their Hyogo Framework commitments. This is the part that helps speed up recovery and reconstruction, reducing the economic hiatus and loss of important development goals that disaster often causes."

Sendai revisited

Menzinger argued that there is also significant potential for cost-effective adaptation on the climate side, depending on the location, anywhere between 40 and 68% of expected losses (and up to 90% in the Caribbean) can be prevented through cost-effective measures. These include physical barriers, improved spatial planning and building codes.

"The fact that this conference is being held in Sendai, which was impacted by the 2011 earthquake and tsunami, makes this conference especially poignant. In the last few years, world-wide, over 700 thousand people have lost their lives, more than 1.4 million have been injured, and around 23 million been made homeless as a result of disasters.

"The total economic loss was more than $1.3 trillion. We all have a stake in this, not just from a business perspective, but for the future of our planet," Parker concluded. "We're hoping that Sendai will be remembered as the conference that turned the trend on disaster risk management."

Published 14 March 2015

Swiss Re Global Partnerships

Engaging with the world allows us to find more robust solutions to common perils. There are limits to what the insurance industry can achieve alone; some risks will require a broader approach involving...

Read the whole story