Disaster Resilience – does regulation matter?

UN Summit on Disaster Resilience, 25th June 2014

Dr. Sebastian von Dahlen

Economic Counsellor

IAIS c/o BIS, Basel

London, 25th June 2014

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Outline

1. Resilience

2. Disasters

3. Learning

4. Integrating disaster risk and resilience

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1. Resilience …

… (re)insurance, and regulation

Toward defining resilience:

Source: von Dahlen (2014), forthcoming in «Exploring Extremes» (book)

Resilience – synonyms include: flexibility and elasticity

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2. Disasters …

… insurance, and GDP growth effects

a) Impact on growth path (GDP) b) Cumulative effect (GDP)

Source: von Dahlen, von Peter (2014), Journal of Financial Perspectives (forthcoming)

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3. Learning …

… including on risks at the sovereign level

Source: von Dahlen (2014), forthcoming in «Exploring Extremes» (book)

Risk identification

Reduced risk

Risk

avoidance

Risk

transfer

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4. Integrating disaster risk and resilience …

… in financial and wider regulation

1. On-going IAIS work:• Macroprudential surveillance (MPS) tools / analytics• Toward a global BCR and ICS

2. More broadly, integrating disaster risks and resilience: • Goes beyond insurance regulation • Should include appropriate incentive structures

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4. Integrating disaster risk and resilience …

… and the post-2015 Framework for Disaster Risk Reduction

• Proposed architecture of indicator system includes:

Source: UNISDR (2014), United Nations Office for Disaster Risk Reduction, Post-2015 Framework for DRR, draft 5 June 2014

• Identify underlying drivers of risk and resilience!

Reducing Existing Risk

Risk sensitive

public sector

Risk sensitive private sector

Avoiding New Risk

Risk sensitive

public sector

Risk sensitive private sector

Strengthening Social and Economic Resilience

Resilient public sector

Resilient private sector

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4. Integrating disaster risk and resilience …

1.Environmental resilience and stability, Actors: e.g. UN, WB;

2.Economic resilience and stability,Actors: e.g. G20, OECD, IMF;

3.Financial resilience and stability, Actors: e.g. FSB, BIS, IAIS, IOSCO;

Source: von Dahlen (2014), forthcoming in «Exploring Extremes» (book)

… and three resilience and stability dimensions:

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4. Integrating disaster risk and resilience ...

... into the financial system

This should include:• Identifying and analysing prevailing risks;• Reducing existing risks;• Avoiding new risks;

• Strengthening financial, economic, social and environmental resilience – 1:100 ?

• Supporting stakeholders from different fields.

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Thank you!