catastrophe risk management | December 02, 2012

Is Your Country Disaster Proof?: Erwann Michel-Kerjan In Nature

In the wake of Superstorm Sandy, catastrophe risk management expert Erwann Michel-Kerjan argues that for a country to be truly resilient to extreme events, they "need to develop national risk-management strategies." In a recent article in Nature, he explains that although we have come a long way in using science to improve decision-making during catastrophic events, there is still more to be done and risk reduction needs to be made a priority. "Sandy was not an outlier," he warns. "It could even be the new norm, as continuing development in high-risk areas combines with intense disasters to produce ever-increasing damage." With economic losses from natural catastrophes ranging between the hundreds of millions to the hundreds of billions, Michel-Kerjan believes that governments need to be confident in their disaster management strategies to avoid suffering more of these crippling losses.

He explains that "governments should be able to answer, comprehensively and quantitatively, [these] five questions:
what risks do we face and where?; what assets and populations are exposed and to what degree?; how vulnerable are [these populations]?; what financial burden do these risks place on individuals, businesses and the government budget?; how best can we invest to reduce risks and strengthen economic and social resilience?" Unfortunately, he says that many governments can not answer these vital questions, which greatly hinders the effectiveness of their disaster-preparedness. "Disaster-risk financing and management [needs to be seen] as a priority," he argues, because the technology and data exists to do so effectively and it can potentially save money and lives.

Michel-Kerjan has most recently been working in partnership with the World Bank and the Swiss Agency for Development and Cooperation to put such a strategy in place in Morocco. In the article, he says that he hopes the work he is doing there can eventually become a case study for other countries to follow in the future. While his field is risk management and risk reduction, his solutions promote the ability for governments, businesses, and other organizations to not only weather these catastrophic events—but to thrive in their wake. In his lectures at the Wharton Business School, and in his keynotes, he says that being prepared for these "black swan" events allows governments, businesses, and individuals to avoid suffering tremendous losses. Further, he argues that we must accept that catastrophic events happen and try to predict the outcome and consequences that these events will have, in order to come up with solutions that can provide value in a chaotic world.

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authors | November 29, 2012