Innovative risk transfer solutions for more resilient societies

Floods in Pakistan and China, earthquakes in Haiti, Chile and New Zealand, drought and wildfires in Russia, winter storms in Europe – the tragic events of this year are terrible reminders of the enormous loss of life, suffering and devastation that natural disasters can wreak on local communities and on whole nations. Climate change could worsen their impact even more. At Swiss Re, we work with corporations, governments, civil society organisations and academia to develop effective risk transfer solutions that make societies more resilient.

Natural disasters and extreme weather cost scores of lives and cause billions of dollars in damage each year. Climate change is likely to increase many of these risks, ranging from more frequent and severe storms, floods and drought to sea level rise, crop failures and ecosystem disruptions. Earthquakes also continue to pose a threat to people living in regions affected by seismic activity.

Strengthening communities’ resilience to such events is therefore all the more pressing, particularly in developing countries where the vast majority of those affected live and where the impacts of natural disasters are felt most heavily. Swiss Re works with public and private partners to design and deploy risk transfer solutions that are customised to the specific risk exposure in these different parts of the world.

Such collaboration has already produced a number of innovative transactions : weather-index solutions for farmers in Africa and India, agriculture insurance schemes for China, catastrophe bonds in Mexico, and parametric earthquake and hurricane covers for Caribbean nations and the US state of Alabama. Swiss Re has also helped develop a methodology for decision-makers to implement their own locally appropriate climate adaptation strategies , with insurance a key part of the solution.

Published 20 September 2010

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