Securing funds before disasters strike

In 2008, natural catastrophes caused total losses of USD 259 billion worldwide. Less than 20% of this amount was insured. Factors such as an ageing global population add to the increasing complexity and interdependency of today’s risk landscape. For governments everywhere this presents a twofold challenge. They need to juggle the diverse risks they face and put solutions in place for financing short- and long-term impact, should the risks become reality. Strong public-private partnerships are a lifeline here. And the epicenter of success is a crucial paradigm shift from obtaining funding after the event, to securing financial protection before.

A holistic, integrated approach to risk management is the only way to bring transparency and accountability to the risk landscape. Governments need to identify and prioritise all potential risks to assess their severity and likely frequency. They are then in a position to implement targeted mitigation, like construction activity and legislation.  Open dialogue has to flow through this entire process to address the question of who can pay for the impact of risks. On completion of the groundwork, each government can draw on private sector expertise and resources to introduce measures to finance economic loss.

In addition to considering the full portfolio of economic, natural, social and technical risks, governments must analyse how these impact each other. A Country Risk Officer or Minister, modeled on the role of a Chief Risk Officer in the private sector, makes a valuable contribution here. This leading figure can also look beyond national frontiers to support international initiatives.