Agostino Galvagni, a member of the Executive Board of Swiss Re and head of the company’s Globals and Large Risks division, told a panel at the RIMS convention in New Orleans that there’s a growing disconnect between risk and mitigation. He called for “bold action” to address it, and pointed to Swiss Re’s recent report – “Global Risks: The View from Davos,” (it was released at the Davos World Economic Forum) as evidence.
Galvagni noted that many of the 23 core global risks explored in the report have worsened over the last year. In his presentation, he introduced the report’s recommendations, which include establishment of Country Risk Officers and formation of a “coalition of the willing” in an effort bring governments and business together to develop and execute mutually beneficial risk mitigation strategies.
Joining Galvagni in the panel discussion were representatives of the Wharton School and Marsh, co-sponsors of the global risk report.
“Global Risks 2007” identified the following as “key needs:”
— Implementation of a successor agreement to the Kyoto Protocol, this one involving the United States and emerging nations, in an effort to legislate the reduction in carbon emissions that are harmful to the environment and climate
— Renewal of schemes that guarantee government support for terrorism insurance, including TRIA in the United States
–Identification of “choke points” in supply chains and vulnerabilities that could exacerbate the threat of pandemics.
“Global risks are tightly woven in today’s world,” Galvagni explained. “Governments and enterprises need to take a holistic approach to overcome silo-thinking and acting. We need to prioritize risks effectively, improve preparedness and strengthen public-private partnerships to mitigate risks and to finance economic losses.”
He also noted that Swiss Re’s position on climate change recognizes the “scientific evidence of rising temperatures and increasing frequency and severity of natural catastrophes.” Swiss Re has faced the problem by introducing more “mitigation and adaptation into global risk management, not only through traditional risk transfer but in the development of insurance-linked securities and weather derivatives.”
Galvagni concluded: “Businesses and investors must realize that there are commercialization opportunities in mitigating climate change. For example, we are seeing robust growth in investment in various forms of alternative energy that in the end can help reduce harmful carbon emissions.”
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