The G20: recognising risk, building resilience

The Group of 20 may not garner as much attention as the G8, but its member-nations provide a template for public sector resilience worldwide.

The reason resides in a single word: resilience. No modern economy can thrive without it, and G20 nations are pursuing innovative means for securing it. They range from creative financial instruments for sharing risk to microinsurance that secures the wealth emerging economies are building through microcredit.

Seeing both sides of risk

The most promising emerging economies recognize on the other side of risk lies opportunity. Nowhere is that more evident than in the country that that hosted the 2012 annual summit of the G20 nations and concluded its presidency of that group: Mexico, a high growth economy in whose resilience Swiss Re is proud to be more involved than ever.

The emergence of economies can largely be charted by the growth of their insurance sectors, and in Latin America and the Caribbean, premiums —which are dragging in other parts of the world —are surging. In those regions, for example, revenue from life insurance premiums rose 9.5 percent in 2011. The figure for other forms of insurance shot up 11 percent. Data across high growth economies tell a largely similar story.

Transferring risk to break the cycle

Swiss Re Americas CEO Eric J Smith (r) meets OECD Secretary-General Angel Gurría (l) at the G20 Financial Regulation and Innovation Conference in Mexico City, November 2012

These societies are also developing new tools for packaging the risk they incur on a widespread scale, such as from natural disasters. In Mexico, for example, Swiss Re structured their Multicat Mexico catastrophe bond. These types of tools, whose wider use the G20 advocates, transfer the risk of natural disasters to the capital markets, breaking a cycle in which every catastrophe imposes tremendous costs on governments and, ultimately, its citizens.

As the Northeast responds to the lessons learned from Hurricane Sandy, resilience, even for industrialized economies, is on everyone's minds. Forums like the G20 are at the heart of this effort and Swiss Re is privileged to be a part of the discussion.

Published 25 January 2013

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