Since 1989 the United Nations has marked an International Day for Disaster Risk Reduction annually on October 13. The day “celebrates how people and communities around the world are reducing their exposure to disasters and raising awareness about the importance of reining in the risks that they face.”
From natural disasters such as earthquakes, hurricanes, tornadoes, floods, and wildfires, to the threat of terrorism and pandemics and the emergence of cyber incidents, catastrophes worldwide are expected to cost society roughly USD 380 billion each year. And those costs may well rise because of climate change. Insurance covers only a portion of the cost, resulting in a large protection gap that leaves governments and communities with a heavy financial burden during recovery.
For the insurance industry, the protection gap can spur innovation in product development. Understanding and measuring the protection gap is one of the biggest challenges facing the insurance industry today. For regions and perils covered by catastrophe models, this protection gap represents not only potential business growth opportunities, but a responsibility to act. Investment in the protection gap is mutually beneficial for all parties: Reinsurers get to diversify the geographic extent and range of perils covered in their portfolios; and host nations benefit from the financial resilience provided by insurance and regulation.
In the public sector, governments are recognizing the importance of moving from reactive to proactive risk management, especially in countries where a risk transfer system is not well established. Understanding the protection gap can help governments assess the risks to their citizens and critical infrastructure, and develop risk-informed emergency management, hazard mitigation, and public risk financing strategies to enhance global resilience and reduce the ultimate costs.
AIR's Global Resilience Practice helps governments and non-governmental organizations prepare for the impacts of disasters before they occur. Through catastrophe modeling we can quantify the impact of damage from disasters and potential risk mitigation strategies to better inform resilience decision-making. Working with us, you can develop effective emergency plans; prioritize mitigation investments that have the greatest return; study the impact of building code changes; design risk financing instruments to ensure quick access to funds after a disaster; and so much more.
Here are just a few of our blogs and articles concerning resilience:
- How Catastrophe Models Can Help Close the Protection Gap
- Bolstering Transboundary Disaster Resilience in Europe
- Leveraging Catastrophe Models for Effective Resilience Planning
- How Catastrophe Models Help Cities Boost Resilience
- Hurricane Michael: Lessons in Risk Management and Resilience
- How the Friuli Earthquake Helped Italy Become More Resilient