A global priority
The United Nations has made risk resilience a top priority, establishing a dedicated secretariat to facilitate the International Strategy for Disaster Reduction (ISDR) in 1999. Skype interview with Munich Re: Robert Glasser, Special Representative of the United Nations' Secretary General for Disaster Risk Reduction and Head of UNISDR.
It is now about one year since you assumed your role as Head of the UNISDR. What has been your most positive experience in this position so far?
Robert Glasser: Most remarkable is the amount of progress I've seen in confronting disaster risk. I've now travelled extensively to take part in regional platform meetings with ministers, officials and heads of government. It's really striking to see how much progress has been made in some places, although not everywhere. And of course there's still a huge amount of work to do. But I am now seeing disaster risk reduction plans. I see in some cases even national constitutions being amended to incorporate disaster risk. I see improving regulatory environments and a stronger role of parliament in enacting laws and regulations. There is also huge success in elements of the disaster risk reduction agenda, particularly in such areas as early-warning systems, evacuation plans and storm shelters in countries like Bangladesh, India and Pakistan. The engagement of private-sector stakeholders is also improving.
What do you see as the major contributing factors to improving/strengthening resilience in the face of natural disasters?
One of the most critical factors adding to the threat and its unpredictability is climate change, so it follows that efforts to reduce greenhouse gases are a major contribution to resilience. I say that because everything we do to reduce disaster risk will be overwhelmed on a planet faced with ever-increasing greenhouse gas emissions. Arguably, the most urgently needed contribution is to cut down greenhouse gas emissions. Then if I look at the next level of detail, I’d say we need to ensure that disaster risk is incorporated into core economic planning. Countries have to understand disaster risk and what it’s costing as well as the trends, because with climate change and other factors the past is no longer a reliable indicator of the risks you face in the future. The insurance industry has this data and is absolutely fundamental in the overall risk management programme.
How can the insurance sector and insurance-related risk transfer mechanisms support your effort to improve resilience?
Transferring risk is of course one of the most important tools countries have in managing risk. While countries need to do everything they can to reduce risk in other ways – by making sure they're not constructing hospitals in flood zones, for example – at the end of the day, once they've done all they can they should have options to transfer a portion of the risk through insurance. In some countries, however, the regulatory framework makes it difficult for insurers to assume this role. Especially in communities that are marginalised, the insurance industry is in a unique position to develop suitable products like mutuals that can reach stakeholders who tend to be particularly vulnerable and exposed to hazards. A further aspect is the fact that governments need first to fully understand risks before they can decide on measures to mitigate them and consider risk transfer. There are huge gaps in both rich and developing nations when it comes to understanding their exposure. Here, the insurance community can offer key support to countries and other stakeholders in raising awareness and laying the groundwork for risk transfer.
You've mentioned the vulnerability of poorer communities. What should be done to further increase resilience in developing and emerging countries specifically?
While all countries face the challenge of building resilience with limited resources, the gaps in developing nations are far greater. These countries are hugely disproportionately affected when disaster strikes. In our analysis, the average annual loss from natural catastrophes in low-income nations equates to over 20% of their annual social expenditure. Secondly, there are gaps in knowledge about disaster losses and generally weak tools for risk profiling and for incorporating risk into economic planning. All of these areas need attention for us to reduce disaster risk, and the insurance industry has a key role to play in every one.
Are there any flagship public-private partnership projects you think could serve as a blueprint – that could be upscaled or copied?
There are actually quite a few in this sphere. Some of them are linked to microinsurance, enabling communities to access insurance products, and working with governments and NGOs. The UNISDR has a major private-sector partnership operating both at a global level with multinationals and at the regional level with very dynamic chapters of private-sector firms, particularly in Japan and the Philippines. This alliance, called the Arise Network, is developing a series of public-private partnerships to reduce disaster risk. Activities range from incorporating risk in the curriculum of business schools, fostering a new generation of executives with an understanding of disaster risk, to working with small to medium-sized enterprises to test their resilience and preparedness regarding disasters – and everything in between. There's also a very interesting initiative we're just beginning linked to the financial sector regulators, the Bank for International Settlements and the Financial Stability Board. We've found important opportunities to incorporate disaster risk into the global regulatory environment that sets the rules for the insurance sector around the world. The challenge is to work out what the appropriate role of the public sector is, because there has to be a compelling private-sector interest as well. It has to be win-win.
The first of four priorities for action stated by your organisation for the next 15 years is "understanding disaster risk". How can insurers support you in this regard?
One of the key ways is what I've mentioned, ensuring that disaster risk is embedded in core economic planning. Working backward from there, there are a whole variety of steps, like understanding disaster loss and risk profiling. On a global level, it would be extremely useful if insurers would open up their data on risk and make it more available. I know in many cases it's proprietary information, but I think there is a compelling shared interest – on the part of insurers as well – in pooling what we know where there’s a lack of open knowledge. This will enable better pricing of risks and open up markets, so more risk can be transferred.
With our nat cat database, Munich Re has a long tradition of sharing knowledge with international bodies, including the UN. Does this go in the direction you're talking about?
Yes, and we are thankful for that. I'm glad to say that others are following suit.