Of Hurricanes, Reactive Politics, Risk Assessments

Of Hurricanes, Reactive Politics, Risk Assessments

Sep 26th, 2013

Hurricanes, Reactive Politics, Risk Assessments

Hurricane Hazel killed a dozen of people around Toronto in 1954.
In the aftermath flood plains development was banned and conservation authorities were created.
After the flooding in Calgary, Toronto, Hurricane Sandy last year in the US and the ominous Katrina in 2005 it seems a good time to ask ourselves if we are doing the right things, enough of them, soon enough?

Calgary could be the biggest flood coverage payout in Alberta history. In 2005 Alberta’s flood reportedly costed insurers already appx. 300M$.
The amount of severe weather claims insurers have covered has raised ten times in the past decade, with catastrophic losses over 1B$ in 2011 and 2012.

From a “reaction” point of view, Major Bloomberg in New York has committed 20BUS$ to protective work in the aftermath of Sandy, roughly 50% of the estimated reconstruction cost.

Climate is changing, potential targets, people, infrastructure are increasing at mind boggling speed. Insurances are battling with old risk assessment approaches, often too crude to allow them to develop good business options.

Any change, at corporate or governmental level, requires political courage and good public communication, democratic consensus. Changes may well be very unpopular (like suppressing insurance coverage to overexposed properties), but if risk is properly evaluated, communicated, better solutions may be developed than at status quo.

Politicians, however, can better exploit a “heroic” reaction to the devastation than a quiet spending for proactive mitigation.

So, here we go again with the short term view of “success”: if nothing happens during my term, I will be remembered as a good guy that spent money on …….insert the name of the project, please……, afterward? Who cares! If it happens during my term I can play it out as the “unheard of”, first in history event (often a big lie) and do my “hero” act. People will vote for me again.

Meanwhile insurers and their clients have to find reasonable ways to cope with their need to be protected from extreme events, do reasonable business, cope with adverse outcomes and stay alive physically and economically.

At Riskope we believe that better risk assessment tools like ORE, quantitative approaches and detailed look on hazards and risks are a fundamental element to increase resilience, sustainability and, at the end, save lives.

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Category: Crisis management, Hazard, Mitigations, Optimum Risk Estimates, Risk analysis, Risk management

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