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Conference Agenda

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Session Overview
TUE4.4: Special Swiss Re session on Economics of Disasters – Costs and Financing mechanisms
Time: Tuesday, 28/Aug/2012: 1:00pm - 2:30pm
Session Chair: Reto SCHNARWILER, Swiss Reinsurance Ltd
Location: Seehorn

Swiss Re Session


Special Swiss Re session on economics of disasters – costs and financing mechanisms


Swiss Reinsurance Ltd

2011 saw extraordinary and devastating catastrophic events. With USD 370bn the highest economic losses to society due to natural and man-made disasters ever were recorded. The earthquakes in Japan, New Zealand, and Turkey, as well as the floods in Australia and Thailand, were unprecedented and brought not only massive destruction but also the loss of thousands of people’s lives. The famine due to severe drought in the Horn of Africa is believed to be the largest human catastrophe of the year. The events in Japan and Thailand also reminded us of the vulnerability of the global supply chains as key manufacturing companies were faced with business interruptions. The resilience of a society not only depends on the severity of an event, but also on the preparedness and available funding for relief, recovery and reconstruction. This session will discuss economic consequences of disasters, how to assess risks and costs, and how to mitigate and finance them.

Cost assessment of natural hazards – state-of-the-art, knowledge gaps and recommendations

Volker MEYER1, Nina BECKER1, Vasileios MARKANTONIS1, Reimund SCHWARZE1, Jeroen C. J. H. AERTS2, Jeroen C. J. M. VAN DEN BERGH3, Laurens M. BOUWER2, Philip BUBECK4, Paolo CIAVOLA5, Vanessa DANIEL2, Elisabetta GENOVESE6, Colin GREEN7, Stéphane HALLEGATTE6, Heidi KREIBICH4, Quentin LEQUEUX5, Bernhard LOCHNER8, Ivana LOGAR3, Elissaios PAPYRAKIS2, Clemens PFURTSCHELLER8, Jennifer POUSSIN2, Valentin PRZYLUSKI6, Annegret H. THIEKEN8,9, Paul THOMPSON7, Christophe VIAVATTENE7

1Helmholtz Centre for Environmental Research- UFZ; 2Institute for Environmental Studies, Vrije Universiteit Amsterdam- IVM-VU; 3Institute of Environmental Science and Technology, Universitat Autònoma de Barcelona- ICTA-UAB; 4German Research Centre for Geosciences- GFZ; 5Dipartimento di Scienze della Terra, Università degli Studi di Ferrara- UniFe; 6Société de Mathématiques Appliquées et de Sciences Humaines/Centre International de Recherches sur l'Environnement et le Développement- SMASH-CIRED; 7Flood Hazard Research Centre, Middlesex University- FHRC-MU; 8Institute of Geography, University of Innsbruck, Austria- UIBK; 9University of Potsdam, Germany

Effective and efficient reduction of, or adaptation to, natural hazard risks requires a thorough understanding of the costs of natural hazards in order to develop sustainable risk management strategies. The current methods that assess the costs of different natural hazards employ a diversity of terminologies and approaches for different hazards and impacted sectors. This makes it difficult to arrive at robust, comprehensive and comparable cost figures.

The CONHAZ (Costs of Natural Hazards) project aimed to compile and synthesise current knowledge on cost assessment methods in order to strengthen the role of cost assessments in the development of integrated natural hazard management and adaptation planning. In order to achieve this, CONHAZ has adopted a comprehensive approach, considering natural hazards ranging from droughts, floods and coastal hazards to Alpine hazards, as well as different impacted sectors and cost types (direct tangible damages, losses due to business interruption, indirect damages, intangible effects, and costs of risk mitigation). Its specific objectives have been 1) to compile the state-of-the-art methods for cost assessment; 2) to analyse and assess these methods in terms of technical aspects, as well as terminology, data quality and availability, and research gaps; and 3) to synthesise resulting knowledge into recommendations and to identify further research needs.

This presentation summarises the main results of CONHAZ. These comprise findings regarding best practices, overall knowledge gaps and recommendations for practice and research as well as a vision on cost assessments of natural hazards and their integration in decision making. The presentation will give an overview on general as well as hazard- specific findings and outline the recommendations that include issues such as comprehensiveness, uncertainties, improvement of data sources, improvement of methods, future dynamics of risk, distribution of risks and risk transfer, knowledge exchange, as well as cost assessment as decision support.

Risk Management of Natural Disasters in Morocco: a project of Global and Integrated Strategy

Tabyaoui MOHAMED

Government of Morocco

Morocco as the rest of the countries is faced with potentially extreme events, due to the number of natural phenomena. These risks are currently managed by many departments. In order to overcome this fragmented management and better coordinate the efforts of various departments, the Government with support from the World Bank and the Swiss Cooperation has launched in 2009 the project of preparing a comprehensive and integrated strategy for managing natural risk reduction in Morocco.

The preparation of such a strategy must go with a phase of identification and assessment of these risks before developing the legal and institutional structure beside the financial resources for the risk strategy implementation.

A probabilistic study has been finalized by June 2012 and has been incorporated in GIS based software. This model aims to assess the exposure to natural disasters in Morocco and the possible consequences on populations, strategic infrastructure and the economy. Initially extreme events considered by this model are droughts, earthquakes, tsunamis, floods and landslides.

The probabilistic model is developed directly with the technical ministries as part of a participatory approach to prepare with each of them several scenarios that will both identify with sufficient precision the sectors exposure levels and also identify preventive measures that could be implemented to reduce vulnerability in each sector.

The various scenarios are then aggregated nationally to make informed choices and to prepare a comprehensive and integrated national strategy for prevention and risk management of natural disasters. This program will enable Morocco to better anticipate natural risks, prepare the necessary budget and therefore better control the impacts of extreme events.

Economic impact of disasters in the Caribbean and experience with CCRIF

Michael NIXON

Government of Cayman Islands

The Caribbean Cat Risk Insurance Facility (CCRIF) has allowed the Cayman Islands to secure an effective means of transferring some of the financial risks associated with their catastrophic risk exposures. It has also helped to highlight the need for active and comprehensive catastrophe risk management and encouraged decision makers to take firm steps to implementing appropriate solutions.

African Risk Capacity – Sovereign Disaster Risk Management for Africa


World Food Programme

On average over the last five years, the UN World Food Programme has spent half a billion dollars annually in food assistance in Africa due to weather-related emergencies. Funding is secured on a largely ad hoc basis after disaster strikes and only then can relief be mobilized. In the meantime, lives and livelihoods are lost, assets are depleted and development gains experience significant setbacks. The African Risk Capacity, ARC, is a groundbreaking project of the African Union designed to improve current responses to drought-related food security emergencies and to build capacity within AU member states to manage drought risks. As an African-owned, continental index-based weather risk insurance pool and early response mechanism, ARC offers an African solution to one of the continent's most pressing challenges. By bringing together the concepts of insurance and contingency planning, ARC aims to create a new way of managing weather risk by transferring the burden away from African governments to international financial markets that can handle the risk much better. This entity will use advanced satellite weather surveillance and software - developed by the UN World Food Programme (WFP) - to quantify the continent's risk, estimate and trigger quick-disbursing funds to help African countries hit by severe drought implement effective and timely responses to vulnerable populations.

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