Catastrophe modeling firm RMS has issued a statement supporting the recently-announced plan by the city of Tokyo to halve expected earthquake casualties over the next ten years, urging other cities and countries to follow suit in setting specific, measurable disaster risk reduction targets.
Reducing the losses, both in human life and property damage from natural disasters should be the foremost item on the global agenda. According to estimates from AIR Worldwide, economic losses from global natural catastrophes likely will triple over the next 15 years, unless steps are taken to reduce bad development choices. The figures, presented at the third UN World Conference on Disaster Risk Reduction in Sendai, Japan, made manifest the need to address catastrophes as a long-term problem.
Dr. Robert Muir-Wood, chief research officer at RMS, explained: “It is very encouraging to see Tokyo’s leadership in driving meaningful, measurable action to reduce the impact of disasters. While the 50 percent national target for reductions in disaster casualties appeared in the draft of the Sendai Declaration on Disaster Risk Reduction, it did not make it to the final version signed last month. We hope Tokyo’s ’50 percent initiative’ will inspire momentum from other cities and countries to step up and make specific disaster reduction commitments measured through the use of catastrophe models.”
While ever more sophisticated cat models are an important part of the efforts to reduce the losses from natural catastrophes, the re/insurance industry is also expected to play a key role. It has collected both the long term data and possesses the available capital to really make a difference in coming to terms with the appalling damage caused every year by natural catastrophes.
The industry’s role in investments is tied into the other sectors. “Investment is our third area,” said Rowan Douglas, Willis CEO for capital, science and policy practice in an interview, following the Economist’s Insurance 2015 conference last month. “Insurers represent one third of assets under management. We have tremendous influence to become a driver of investment resilience, climate smart investment – not because it’s green, not because it’s sustainable with a cuddly polar bear, but because it’s generally about risk.”
RMS’ statement notes that it is through risk modeling that the results of the decision in Tokyo will be assessed, and its “progress against the casualty reduction goals without any lives being lost. The city will model the performance of building stock in terms of collapse rates, fire starts and fire spread, which could result from a magnitude 7.3 earthquake under the city, comparable to a scenario that occurred in 1855.”
Dr. Muir-Wood added: “The impossibility of measuring future disaster risks with only a few decades of historical data led to the expansion of catastrophe modeling within the insurance industry after 1990.
“Now these same models are being employed to set and measure targets for disaster risk reduction. Risk modelers such as RMS will need to facilitate this by further developing tools and capabilities to model and audit disaster risk reduction targets.” He urged “more countries and cities to set similar targets for reducing the cost of disasters relative to national or city-wide GDP, which would also be measured using catastrophe models.”
Sources: RMS and previous articles
Topics Catastrophe Profit Loss
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