Swiss Re spreads the message of societal resilience at the UN

Resilience building and the role of the insurance were some of the topics discussed at the 2014 Investor Summit on Climate Risk.

The insurance industry is vital in the process of increasing societal resilience, especially in planning for and recovering from low-frequency, high-severity weather events.  That's the message Swiss Re Americas CEO Eric Smith took to the 2014 Investor Summit on Climate Risk in New York.

Smith was the keynote speaker for the 15 January event hosted by CERES, a non-profit organization that brings together institutional investors, asset managers, sustainability leaders and other stakeholders to work towards sustainable leadership. The summit aimed to spur increased low-carbon, clean energy investment and catalyze investor action.

Innovative ways to measure risk

New York is no stranger to severe weather events, with 2012's Hurricane Sandy being the most costly natural disaster to strike the city: economic losses were USD 19 billion. Even worse, 43 lives were lost.  Smith told the audience that the insurance industry has tools to help cities bounce back from such events, pointing out Swiss Re's Economics of Climate Adaptation (ECA) studies as a blueprint for how locations such as New York City (PDF, 420 KB) can assess and quantify the risk that they are exposed to.

"Improvements to infrastructure also need to be recognized in a standardized way. Insurers and investors have no standardized metric for assessing the resilience of a community.  Creating a common 'resilience rating' might help create the necessary market conditions for doing so," Smith told the audience.

Risk transfer: a cost-effective path

The ECA research shows that transferring risk to insurance markets can be the most cost-effective alternative to manage residual risk for developing economies that can’t afford massive investments for low-frequency events.  

Insurance also relieves strain on public budgets when disasters occur, making communities more resourceful.

Published 20 January 2014


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