summary:

YEAR XI // 2 - 2006

NUMBER

3901 editorial

02 Bancassurance and life assurance

10 Management of IT Risks

18 interview: Michel Rosengaus

Moshinsky

Head of the Mexican

National Meteorological

Service

24 agenda

A Publicationwww.mapfrere.com

The distribution channels for insurance products

are a key factor in the development of insurance

companies. Traditional channels such as agents,

the internet and offices live alongside banking

distribution. In this issue TRÉBOL publishes an

interesting assessment of the banking channel

and its capacity for distributing life insurance,

what has become known as “bankassurance”.

The capacity that companies have to evaluate

and minimise risks is becoming increasingly

important. Terrorist attacks and serious

accidents can suppose a crucial test for many

companies, a test which some do not manage

to overcome. Their great dependence on

information technology makes it necessary to

maintain extreme vigilance over the machines,

the programmes and the networks which are

used in the day-to-day running of companies.

This issue of TRÉBOL includes an overview of

these risks and their management.

TRÉBOL has interviewed the head of the National

Meteorological Service Unit of Mexico, a

country which is especially exposed to tropical

storms. His main duties include coordination

with the civil protection system and assessment

of the potential damage which may be caused

by these climatic conditions, these detailed

here in this interview.

2 number 39 // 2 - 2006

Juan Fernández PalaciosTechnical General ManagerMAPFRE VIDA (Spain)

“Bancassurance has helped deci-

sively to increase the specific

importance of insurance in the

economy. As regards quality, ban-

cassurance has accelerated the

transformation of life assurance by

introducing in its savings schemes

mechanisms that are capable of

competing with other financial

products in yield, transparency and

adaptation to the needs and pref-

erences of clients.”

1. Introduction

One of the most remarkable develop-

ments on the “Spanish insurance” scene

in recent years, especially as regards life

assurance, is the emergence and devel-

opment of bancassurance.

The term refers to the sale of insurance

products through the branch networks

of financial institutions and its impact has

been notable in both quantitive and quali-

tative terms.

From the quantitive aspect it has helped

decisively to increase the specific impor-

tance of insurance in the economy.

As regards quality, bancassurance has

accelerated the transformation of life

assurance by introducing in its savings

schemes mechanisms that are capable of

competing with other financial products in

yield, transparency and adaptation to the

needs and preferences of clients.

Below we look at the reasons that led

to the appearance of bancassurance in

Spain, at the motives that drove its devel-

opment, as well as its current importance.

We will also consider the evolution of

bancassurance types and the challenges

and matters still to be resolved that are

facing this distribution channel. All this

with regard to life assurance.

Bancassurance and life assurance

3number 39 // 2 - 2006

2. Emergence and Development of Bancassurance

2.1. Initial Situation

Until the second half of the 1980s, we

were independently located between the

distribution networks of the banks and

the marketing channels of the insurance

companies; the fact that most of the large

insurance companies belonged to bank-

ing groups or savings banks did not lead

to the systematic joint creation of market-

ing channels.

Nevertheless, this basic separation did

not hinder the maintenance of certain

relationships between the marketing

activities of insurance companies and

banks, such as:

1. The existence of certain insurance

products linked to typical financial opera-

tions (life assurance to pay off personal

and mortgage loans, compulsory fire

insurance required to obtain such loans),

whose marketing normally did not

require the involvement of an insurance

specialist.

2. The participation, in various ways,

of certain persons responsible for bank

branches in the marketing activity of some

insurance companies, which took advan-

tage of the resulting client relationship.

The image of banks and savings banks

amongst savers at the end of the 80s was

clearly superior to that of insurance com-

panies. This meant that their clients had

greater confidence in these institutions,

which began to be attractive to insurers

who needed an effective marketing vehicle.

The above table illustrates this point.

Comparative Image Survey of Banks, Savings Banks and Insurance Companies (end 80s)

Savings Banks Banks Insurance companies

Safer 54% 27% 8%

Invest your money better 44% 28% 4%

Quicker 45% 31% 7%

More informative 37% 25% 10%

Treat clients better 40% 23% 9%

Source: Survey by Insurance Research Organization (ICEA))

4 number 39 // 2 - 2006

2.2 Reasons the Strengthening of Relations between Banks and Insurers

As a result of the aforementioned situa-

tion, in the late 80s and also in the 90s

there was an increasing move by the

insurance companies to use bank mar-

keting channels. This development, which

was encouraged by all parties, not only

involved institutions within the same

group but also organizations independent

of each other.

We can list the following as the main rea-

sons for this trend from the viewpoint of

the financial institutions:

1. Availability of extensive bank and sav-

ings bank networks with an ample supply

of human and material resources. The

existence of this infrastructure as a result

of the particular development of the

financial sector, forced Spain to adopt

measures to make it profitable. Amongst

these the inclusion of new financial prod-

ucts and quasi-financial products such

as investment funds, property operations,

and importantly, insurance, stand out. By

this means cost distribution was spread

over a wider business base.

2. The reduction in intermediary margins

due to the rise in deposit costs as a

result of greater competition or across-

the-board rate cuts. The need to offset

the reduction of operating profit by

increasing commission income gener-

ated by different kinds of services was

considered.

3. In a fairly mature financial product mar-

ket with a high level of competition, the

banks and savings banks did not neglect

the need to strengthen client relationships

and offered the most extensive product

range possible.

4. Finally, in spite of the large number of

bank and savings bank branches, there

were certain areas, particularly outside

the traditionally established field of each

financial institution, where they did not

reach; by strengthening ties to the insur-

ance sector they would also later be able

to avail themselves of the network of

insurance company agents as a marketing

channel for banking products.

The following are the insurance sector’s rea-

sons for using bancassurance:

1. The need for marketing outlets to give their

business a greater rate of growth so as to

meet the heavy potential insurance demand

arising from the economic expansion as a

result of Spain’s entry into the EEC.

2. The advisability of applying advanced

technology to insurance distribution

to reduce costs and improve service.

Spanish insurance companies have fre-

quently not had the necessary technical

means to tackle growing market compe-

tition because of inadequate technology.

The bancassurance model, which looks

towards banking when setting efficiency

ratio targets, has been salutary for the

insurance sector by driving the compa-

nies towards greater modernization and

renewal of their operating models. Even

so, there still remains a balance in favour

of banking in respect of resources dedi-

cated to technological development.

2.3 The tax factor

The interest of banks and savings banks

to include insurance products amongst

their portfolio was influenced to an impor-

tant degree by their desire to pass on

to their clients the advantages that the

income tax regulations have traditionally

conferred on long-term savings in gen-

eral, and on life assurance endowment

schemes in particular.

From the mid-1980s financial institutions

concentrated on designing products

that favoured the concept of financial/

tax returns, as these had been a factor

in driving the growth of life assurance

endowment schemes in Spain in recent

years. The process was not without its

problems, because as a sub-product of

this activity operations emerged known

as “single premiums”, which, because

of problems regarding client transpar-

ency and differing interpretations by the

financial marketing entities and the tax

authorities, produced a serious and lasting

dispute, which had a negative effect on

the sector’s reputation.

The tax incentive has continued to be the

driving force behind life assurance, in spite

of the appearance in 1987 of pension

plans and funds, which are specifically

regulated final savings instruments with

more important tax advantages from the

outset than any other financial or insur-

ance product.

5number 39 // 2 - 2006

2.4. Pre-eminence of the Spanish Banking System

In short, the Spanish banking system presented itself as an opportunity to speed up the development of the insurance industry,

especially in life business. This continues to be the case and its strength is reflected in the following data from 2005:

Increasing computerization and ever-increasing telephoneand Internet banking availability

financial institutions

financial institutions:

Branch offices of foreigncredit institutions:

Banks:

Credit cooperatives:

branches one of the EU’s most extensive networks

951 inhabitantsper branch

+8,000 inhabitantsper branch

+5,000 inhabitantsper branch

cash dispensers more than one forevery 1,000 inhabitants

6 employees per branchcompared with an average12 employees per branch in the EU

1,6 credit cards per inhabitants over16 years of age

Spanish Banking System (data from 2005)

Source: Banco de España

6 number 39 // 2 - 2006

2.5 Current Importance of Bancassurance

Finally, the level of consolidation achieved

by bancassurance in the Spanish life

assurance sector is reflected in the infor-

mation in the table of this page.

3. Types of Bancassurance

The reasons given for the strengthen-

ing relationship between banks and

insurance companies help to explain

the appearance and development of

Bancassurance as a concept. The truth

is, however, that initially this distribution

channel was mainly brought about by

the specific creation of wholly-owned

insurance companies by banks and

savings banks, which was clearly instru-

mental. This fact was evidenced by:

Full integration of the insurance

company into the bank or savings

bank structure, i.e. into the

respective group’s functional

organigram.

Intensive use of insurance products

by the systems and branch networks

open for normal business.

Use of services provided by corpo-

rate units of the bank or savings bank

group.

Maximum reduction of technical and

human resources in the company itself.

Later this original type of bancassurance

developed at the same time as the vol-

ume of insurance business grew along

with the results and value added by this

model and the complexity of its manage-

ment. Today there are beginning to be

a significant number of financial groups

that are opting to become involved in the

project with highly respectable independ-

ent groups, who are well equipped with

management skills and brand images.

“In the late 80s and also in the 90s

there was an increasing move by

the insurance companies to use

bank marketing channels. This

development, which was encour-

aged by all parties, not only

involved institutions within the

same group but also organizations

independent of each other.”

In this connection it is worth mentioning

as typical market examples Caixa-Fortis,

MAPFRE-Caja Madrid, Aviva in conjunc-

tion with several savings banks and also

Zürich-Deustche Bank.

Percentage Distribution of Life Assurance by Channel. 2004

Premiums Number of Policies

Portfolio New Business Portfolio New Business

Agents 14.6 % 15 % 23.6 % 19.8 %

Brokers 7.7 % 4,3 % 5 % 4 %

Banks & Savings Banks 60 % 71.1 % 61.3 % 71 %

Direct Offices 15 % 8.3 % 6.4 % 2.9 %

Others 2.7 % 1.3 % 3.7 % 2.3 %

100 % 100 % 100 % 100 %

7number 39 // 2 - 2006

Each of these cases represents its

own type of joint venture, but they all

share the following common character-

istics:

Business management is wholly under-

taken by the insurance group, which

for this purpose sometimes uses its

own existing resources, and in others,

employs resources obtained from previ-

ous bancassurance activities; the aim is

to seek to take maximum advantage of

the economies of scale brought about

by integrating management within its

traditional business, i.e. as seen from a

multifaceted perspective.

For its part, the bank or savings bank

acts as intermediary which may be evi-

denced by signing an agency contract

with the insurance company, in which,

where applicable, the marketing com-

missions to be paid on each product

marketed through the network are

stipulated. Such products are fully inte-

grated into the bank’s or savings bank’s

portfolio, so that the marketing image

adopted is that established for their

entire portfolio. On the other hand, cli-

ent relationships are always channelled

for all marketing purposes through the

banking network, except for admin-

istrative communications, which the

insurance contract specifies should be

undertaken by the insurance group.

Product marketing integration is also

accompanied by maximum integration

of computerized tools in the bank or

savings bank branches or other outlets,

in order to achieve the optimum level

of operational automation, so that this

comes as close as possible to the sys-

tem used for contracting the respective

entity’s other non-insurance products.

The foregoing is compatible with main-

taining a company that is jointly owned

by banking and insurance groups; such

8 number 39 // 2 - 2006

a company legally assumes the insured

risks and reflects the maximum involve-

ment of both parties in the develop-

ment and overall outcome of the busi-

ness. Furthermore, the jointly-owned

company usually serves as a vehicle for

considering future insurance and bank-

ing plans and taking decisions on vari-

ous matters including:

– General business strategy,

– the product portfolio to be marketed,

– design and marketing characteristics,

– development priorities,

– targets to be achieved by each one

in any given financial year,

– the planning of publicity campaigns

and marketing backing,

– systems, contents and publishing fre-

quency of management information,

and

– training plans.

4. Current Bancassurance Challenges

The contribution made by Bancassurance

to the growth of the sector in recent

years has been important. The rate of

development achieved cannot however

easily be extrapolated for the short-term

future.

Firstly, for the simple reason that this

channel is nearing its maturity; the

involvement of financial institutions in

marketing life assurance came about

at an opportune moment, but also at

a time when there was the capacity

to absorb rapid growth in business.

It can be said that, contrary to initial

fears, “banking networks were market

makers”, and brought life assurance to

places not reached by the traditional

networks without reducing, in absolute

terms, the size of the business they

controlled.

“The bancassurance model, which

looks towards banking when set-

ting efficiency ratio targets, has

been salutary for the insurance

sector by driving the companies

towards greater modernization and

renewal of their operating models.”

In turn, the distribution of premium vol-

umes between the different channels

will also tend to stabilize, with special

reference to agency networks, which

are adopting a more general profile.

Indeed, in the wake of bancassur-

ance we are currently witnessing an

expansion in the sale of strictly financial

products relating to loans and deposits

through insurance agents.

Nor should the distance marketing

channels be overlooked, particularly

the internet, which although growing

at a slower rate than anticipated, is

being converted by society into a lead-

ing strategic marketing medium; this

will also be the case for life assurance

companies.

And secondly, because the first signs of

bancassurance exhaustion may soon

be seen, based exclusively on exploit-

ing the tax advantages in life assurance

endowment schemes and in cross-sell-

ing with other bank and savings bank

financial products in other types of life

assurance.

Indeed, the view that the different

savings products should receive the

same tax treatment is beginning to

gather strength in the industry and

amongst legislators, a principle that

implies the same taxation for prod-

ucts that are similar in character and

purpose. There is, however, no rea-

son to deny governments the faculty

to discriminate positively in favour of

those instruments that are especially

well suited to achieving political, eco-

nomic and social objectives. Here we

make mention of the need to provide

incentives for final savings, especially

those directed towards retirement,

when they are channelled through

products that facilitate long-term

realization, in a systematic manner

and with maximum guarantees. In this

field, life assurance, where legal sol-

vency requirements are much

more pronounced in favour of savers

than those set for other savings

instruments, has a fundamental role

to play.

The fact that different savings vehi-

cles may easily be substituted one for

another is more pronounced in the

absence of tax advantages and this

may, in the context of bancassurance,

be to the detriment of life assurance if

the companies fail to undertake con-

sistent training initiatives that allow the

distinguishing features of life assurance

to be exploited, at the same time as

service to clients is improved. The most

important of these features are:

9number 39 // 2 - 2006

Cover for biometric risks, which allow

for probable survival and the possibility

of combining savings and risk protec-

tion guarantees, by using a mechanism

better adapted to the needs of clients

and their families in the different situa-

tions that may have a contingent bear-

ing on their lives.

In line with the foregoing, greater

capacity to integrate with and comple-

ment the public schemes for covering

risks and pensions.

Guarantee of returns at medium,

long and very long term, backed by a

proven ability to manage investments,

to control and neutralize financial risk

in those areas, in which final savings

schemes are usually developed.

Finally, the use of protection and sav-

ings insurance should be furthered

through training, without overlooking

the essential mechanism of incentive,

as a method of attracting new clients

for financial institutions. In summary,

the aim is to develop Bancassurance

as an instrument for establishing new

business relationships arising from

insurance products, and not merely

as a way of increasing the relationship

ratios of existing clients.

Insurance-linked lending has in recent

years been an indisputable source of

growth for risk insurance. The future

of bancassurance, however, cannot

be sustained by this alone, but rather

it must develop further its ability to sell

policies independently of other busi-

ness. Only in this way can we speak

of bancassurance as a true distribution

channel.

10 number 39 // 2 - 2006

Management of IT Risks

Esther Cerdeño Deputy Director of ITMAPFRE REASEGUROS (Spain)

“The market needs insurers to

study the feasibility of insuring

costs relating to loss of infor-

mation; in order to do this the

insurance companies analyse

the various aspects in con-

nection with these risks”

1. Introduction

The extent to which companies depend

on their computer systems and their

complex nature have given rise to

increasing concern about safeguarding

the systems’ ongoing operation from

faults and interference. Furthermore, pro-

tection of data on third parties, customers

and employees contained in databases is

of prime importance in controlling privacy

and rendering it safe from interference

and preventing leakage of information to

others. In order to achieve the foregoing

it is necessary to set up a series of meas-

ures to ensure that computer systems are

securely protected against service inter-

ruptions.

Corporate concern about security and

the correct functioning of equipment has

led to an increase of 60% in expenditure

on IT applications for data protection

and security purposes, whereas other

areas, such as software updates, have

maintained their growth in recent years.

Attacks, whether by sabotage or virus or

even as a result of natural disasters such

as earthquakes, fires or hurricanes can

wreak havoc on equipment and databas-

es, causing important information losses

and major direct expenditure in addition

to possible negative effects on the com-

pany’s future image and reputation.

This concern with security entails major

expenditure on contingency plans and

safeguards, whose maintenance and

readiness need specialized personnel

in the different areas that comprise the

company’s IT network. In some cases

these services have been outsourced to

other companies, however this does not

eliminate the problem because the same

defence mechanisms must be set up in

the outsourcing company.

In view of this situation the market needs

insurers to study the feasibility of insuring

costs relating to loss of information; in

order to do this the insurance companies

analyse the various aspects in connec-

tion with these risks, ascertain which

studies need to be carried out, the costs

involved, and, finally, whether the risks are

insurable.

This article attempts to identify the risks

and in general terms the preventive

measures that can be taken to insure the

information. There follows a brief review

of a possible plan for continuing the

business and recovering information in

catastrophic situations, in addition to set-

ting out what the insurance company can

do to offset the financial costs incurred

through loss of information and equip-

ment.

2. 2. Risk Analysis – Contingency Plans

Risk Factors

Various studies on the reasons for data

loss in computer systems have shown

that up until six years ago the main

causes were hardware faults or equip-

ment malfunction, whereas today losses

caused by viruses, sabotage and other

external factors have increased.

Amongst the reasons for corporate data

loss (see Table 1-page 14) are the follow-

ing:

Hardware failures in the computer sys-

tem

Human error

11number 39 // 2 - 2006

Software failures

Threats from external sources such as

viruses and outside hackers or from

employees within the company

Natural and man-made disasters,

including those of a political nature

Company Situation

At a time when fresh threats to corporate

and institutional computer systems are

appearing constantly, it is vital to ensure

business continuity. To this end companies

should draw up emergency contingency

plans to enable them to continue their

daily activities in all circumstances.

Drawing up a “business continuity plan”

involves analysing the potential risks and

evaluating the potential losses. According

to some studies however, up until the

2007 financial year only 35% of large

companies will have a solid business con-

tinuity infrastructure, in spite of recom-

mendations from those in charge of IT in

this regard.

As a recent examples of the aforemen-

tioned risks it is worth remembering that

some companies located in New York’s

Twin Towers disappeared after the terror-

ist attacks of 11 September because they

lacked data backups held outside those

buildings. The power cut in New York and

Canada also had major financial conse-

quences. In February 2005 the fire in the

Windsor Tower in Madrid’s financial centre

disrupted businesses and affected thou-

sands of workers; in some cases it took

up to 96 hours for some companies to

resume their normal business activities.

Armed with this information, it is clear that

expenditure on security and business con-

tinuity will grow rapidly in coming years to

reach a figure of approximately USD116

billion (EUR 91.17 billion) in 2007, accord-

ing to IDC (International Data Group), who

analyse world markets and forecast future

Internet and IT trends. Furthermore, a

report by Gartner Dataquest states that

“one out of every three North American

businesses could lose data vital to their

continuing operational ability in the event

of a disaster, unless they draw up an

emergency contingency plan immediately”,

and “rather than prioritizing investments,

emphasis should be placed on ensuring

that businesses can recover productivity

quickly following an incident”.

As will be seen from preceding para-

graphs, the answer is to have a contingen-

cy or business continuity plan covering the

entire organization and computer systems,

whether on paper or in electronic format.

It is a matter of analysing how to prepare

such a plan, who should draw it up and

monitor it and what the cost will be.

ISO 17799

ISO 17799 is a list of flexible suggestions

that assists those responsible for corpo-

rate IT security to set up an effective plan,

irrespective of size or sector.

The technical standard was purposely

designed to be flexible, without advocat-

ing any specific security solution. The

suggestions contained in ISO 17799 are

impartial as to technology and help to

assess and understand existing security

measures.

It establishes a progressive model based

on security at different stages, from which

the most appropriate should be selected

in accordance with the company’s busi-

ness.

Within the area concerned with maintain-

ing business continuity, it is advisable to

be prepared to effectively deal with busi-

ness disruption and protect assets in the

event of a natural disaster or a man-made

event.

Table 2 (see page 16) sets out a possible

means of implementing a contingency

plan which should, at a minimum, cover

the following points:

Graph 1: Reason for Data Loss (%)

50

45

40

35

30

25

20

15

10

5

0Natural

DisastersHuman

DisastersHardware Problems

Software Problems

Virus, Hackers, etc.

Others

Year 2005 Year 1998

12 number 39 // 2 - 2006

Classification of technological resourc-

es. Analysis and inventory of:

– Electronic equipment on which the

company relies

– Applications (accounting, administra-

tion, HR)

– Services (inter-office links, internet

access, etc.)

Classification of logistical resources

– Fixtures and fittings

– Office equipment

Classification of operating resources

– Description and identification of the

business carried out by the company,

highlighting key procedures

Security at different stagesISO 17799

Basic Level

Low fraud risk.

Absence of Personal Data.

Low dependence on technology.

Intermediate Level

High fraud risk.

Personal Data and legal regulation.

High dependence on technology.

High Level

Heightened fraud risk.

Personal Data and legal regulation.

Fully dependent on technology.

Governmental Level Information to be protected, which, if divulged,

could compromise the nation’s security and defence.

13number 39 // 2 - 2006

– Security

– List of those responsible for the dif-

ferent areas (databases, application

servers, etc.)

– Supply of water, light, etc.

Risk analysis. List of risks (human

error, sabotage, etc.) and classifica-

tion.

Search for potential weak points in

the existing infrastructure

Estimate of maximum period of

inactivity (disruption time) and maxi-

mum period that a key procedure

may be interrupted without affecting

the organization’s viability.

Identification of recovery times at

a minimally acceptable initial level,

and thereafter, full recovery times

for the company’s business.

Options in the event of failure (duplication,

replication, additional backup copies)

Identification of procedures to be imple-

mented in the event of an incident

Setting up a schedule for periodic

reviews and updates

Setting up a test schedule.

ISO 17799Summary of the areas covered by ISO 17799

Organizational Security Logical Security Phisycal Security Legal Security

Security Policy

OrganizationalSecurity Aspects

Classification and Access Control control of Assets

Approval

Security Relating to Personnel Phisycal and Environmental Security

Systems Development Communications and Business Continuity and Maintenance Operations Management Management

Ope

ratin

g

Stra

tegi

c

T

actic

al

14 number 39 // 2 - 2006

Table 1: Causes and Preventive Measures

Hardware Failures: Incorrect Operation

Causes

Faults in a given key device:

– Disks.

– Controlling mechanisms.

– Processors.

– Memory.

Electrical faults.

Preventive Measures

Duplication of server equipment.

Duplication of components such as fans and power sources.

Backup controlling mechanisms.

Backup disks.

Computer rooms protected against fire, flood and high temperatures.

Uninterrupted power supply system (UPS).

Creation of backup copies. Location of backup devices in places other than computing centres.

Human Error

Causes

Accidental deletion of files, data.

Boot-up whilst confusing disks with valid data.

Execution of incorrect application sequences.

Preventive Measures

Development of applications in non-production systems.

Testing of all applications in so-called preproduction systems, with a series of data similar to that used in production.

System of daily backups.

15number 39 // 2 - 2006

Table 1: Causes and Preventive Measures. (continued)

Corruption of software

Causes

Updating to new versions of operating systems.

Updating to new versions of a specific application.

Installation of patches that are not compatible with the existing system.

Installation of new controllers.

Failures arising from complex configurations.

Failures arising from unregistered applications.

Preventive Measures

Installation of drivers, patches, etc. in non-production systems.

Daily creation of backup copies.

Systems for backing up online.

Additional copy systems.

Analysis and diagnostic tests prior to installing new applications.

Viruses, Hackers and Malicious Codes

Causes

Massive generation of email that overwhelms the system and corporate mailboxes.

Use of security flaws that prevent system connections. Denial of service attacks.

Unexpected system restarts.

Access to websites viewed as dangerous.

Use of programs such as e-Donky.

Preventive Measures

Implementation of preventive measures regarding opening emails from sources unknown to users.

Use of antivirus. Updating antivirus at least once a day.

Use of tools for analysing packages on the Web.

Tools for analysing contents and blocking access to blacklisted sites on the World Wide Web.

Natural and Man-Made Disasters

Causes

Fires.

Storms.

Earthquakes.

Floods.

Sabotage.

Terrorism.

Preventive Measures

Establish security policy.

Protection of buildings (reinforced basement and roof).

Fire extinguishing equipment.

Air-conditioning systems.

Systems duplication in different locations.

16 number 39 // 2 - 2006

Table 2: Methodology for a contingency plan

Analysis of effect on the business

Setting up of plan development group.

Identification of key functions.

Analysis of the impact of a disaster on each key operation.

Identification of minimum service levels.

Assessment of the cost/benefit ratio of each alternative.

Planning

List of applications.

Appointment of person responsible.

Preparation of plans.

Documenting the plan.

Confirmation of plan.

Recovery Strategy Backup systems – online/offline.

Duplicate backup systems, additional copies.

Simulations

Estimating the scope of the simulation.

Establishing the applications or services.

Possibility of tests in real time.

Carrying out tests.

Documenting tests.

Maintaining the Plans

Updating the contingency plan in accordance with the results obtained in the tests.

Periodic reviews.

Updates to include new services, applications and systems.

Audits.

Table 3: Summary of the stages for drawing up the Business Continuity Plan

Define and Document the Continuity Strategy

Time for activating the plan.

Technological infrastructures.

Key locations.

Alternative manual procedures.

Development

of the Manual for

the Continuity Plan

Support information.

Working groups.

Procedure for replying.

Recovery stages.

Restoration stages.

Procedures.

Approval of the Plan by

Senior Management Persons responsible for execution.

Test Plan Identification of potential deficiencies.

Updating the Plan.

Plan maintenance

Awareness campaign.

Continuous training.

Review.

17number 39 // 2 - 2006

Insurance Companies

Faced with the situation described in the

preceding paragraphs, it is necessary to

analyse what the insurance companies

can offer and on what they should base

their studies for accepting such risks. The

companies that are writing this type of

policy are those that specialize in technol-

ogy and the dot-coms, because they are

more aware of the pitfalls.

There is a lack of knowledge on the

part of policyholders on the availability

of cover. Some surveys on the exist-

ence of a policy and what is the cover

for damage caused or loss suffered to IT

systems, indicate that about 40% of the

insurance market is unaware of it. In most

cases, policies do not cover incidents

arising from earthquakes and storms.

It is also noted that about 34% did not

have any type of insurance. In order

to obtain appropriate cover, and for an

insurance company to offer it, it is neces-

sary to quantify and identify the risks to

be insured; this requires time, knowledge

and human resources.

Insurance policies covering computer

equipment fall under engineering busi-

ness, classified as “Computer Insurance”

or “Electronic Equipment Insurance”.

Purely for information purposes,

“Computer Insurance” may cover dam-

age suffered by data processing equip-

ment, in accordance with the information

given in the contracts. Damage arising

from wear and tear, installation, effects of

temperature, etc. is excluded.

Cover may be extended to costs arising

from recuperation of data due to dam-

age suffered by such items as disks and

tapes.

“At a time when fresh threats to

corporate and institutional com-

puter systems are appearing con-

stantly, it is vital to ensure busi-

ness continuity. To this end com-

panies should draw up emergency

contingency plans to enable them

to continue their daily activities in

all circumstances.”

In the basic type of policy, the cover

includes material damage to equipment,

including that to magnetic data tapes,

even in transit (caused by impact, fires

and falls).

Specifically, “Extraordinary Risk”

cover offered by the Consorcio de

Compensación de Seguros Español

extends to a series of risks including

damage caused by:

Earthquake, extraordinary floods, vol-

canic eruptions, storms, falling astral

bodies and meteorites.

Terrorism, rebellion, revolution, riot and

popular uprising.

Other additional risks that may arise

relate to compensation for expenditure

incurred by the policyholder for rental

or use of other equipment due to inabil-

ity to access the computer room as a

result of an accident in the area of the

building or of the room housing the

insured equipment. The failure of the

public electricity supply that accidentally

interrupts the operation of the insured

equipment, giving rise to rental expendi-

ture and use of other equipment, will

also be viewed as a covered risk.

In line with the foregoing, each insur-

ance company should carry out a study

of the situation of the computer equip-

ment belonging to the company taking

out the insurance, prior to accepting the

policy. One important aspect would be

to establish whether there is a contin-

gency plan, or, without going to such

an extreme, to ask what measures are

being implemented to back up equip-

ment and what the policies are relating

to security, antivirus and detection of

hackers, as outlined in the preced-

ing paragraphs. Clearly, risk cover and

its price will depend on the level of

knowledge of these aspects and on the

action plan to avoid contingencies and

reduce costs, in addition to the period

of inactivity.

In accordance with the clauses con-

tained in the insurance contracts, a

large part of the expenditure should be

covered by the insurance companies,

although, as indicated by the surveys,

most companies are not currently aware

of the extent of available cover.

18 number 39 // 2 - 2006

intervew

Michel Rosengaus MoshinskyHead of the Servicio Meteorológico Nacional de México (SMN – Mexican National Meteorological Service)

Education• Degree in Civil Engineering, National Autonomous University of

Mexico (1980).

• Master’s degree in Hydraulic Engineering, National Autonomous University of Mexico (1982).

• Doctor of Science (Hydrodynamics & Coastal Engineering), Massachusetts Institute of Technology (1987).

Career Path

• 1988-2002: Researcher in the Mexican Institute of Water Technology, founder of the “Hurricane Group”, appointed the first Deputy Coordinator on becoming Hydrometeorology Coordination.

• 2002 to date: Head of the Office of the National Meteorological Service of the National Water Commission.

• 2002 to date: Permanent Mexican Representative at the UN World Meteorological Organization.

• Author of Destructive Effects of Tropical Cyclones. Mapfre, 1998.

• Co-author of Climatological Atlas of Tropical Cyclones in Mexico. CENAPRED, 2002.

The accuracy and timeliness of information provided by SMN may save lives

"The main challenge for SMN is to keep up to date in the race for technological progress, without neglecting its necessary everyday tasks"

Source: NOAA

19number 39 // 2 - 2006

What are the principal duties of the

Mexican National Meteorological

Service (SMN), as a subordi-

nate body of the National Water

Commission? Under what circum-

stances does the SMN have to report

on its activities?

The three main duties of the SMN are as

follows:

To maintain the National System for

Civil Protection opportunely informed

on significant hydrometeorological

phenomena that threaten the lives,

infrastructure or means of production

of any sector of Mexican society, and

to support the system technically in the

decision-making process in the context

of the physical phenomenon itself.

To operate on behalf of the National

Water Commission (CNA), and the

environmental sector in general (the

system for observation, measurement,

analysis, diagnosis and forecasting of

meteorology and climatology), back-

ing the assessment of the country’s

water resources and also operating the

nation’s water infrastructure.

To prepare, publish and broadcast a

number of meteorological and clima-

tological products that are of use to

Mexicans in their daily life.

It is important to note that the order

of importance of these three tasks is

precisely the opposite of what the pub-

lic usually associates with its National

Meteorological Service. Giving forecasts

on whether to take an umbrella or not is

in fact of secondary importance today

compared with SMN’s other activities.

interview

Organization and infrastructure of Mexico’s National Meteorological Service.

Organization

General Management

of SMN

Sub-

Management

of Weather

Forecasting

Sub-

Management

Medium and Long-

Term Forecasting

(Climatology)

Sub-

Management

Environmental

Atmospheric

Monitoring

Sub-

Management

Networks

Sub-

Management IT

and

Telecommunications

Sub-Management Communications and Institutional

Development

Administration

Meteorology Management

Management of Observation Networks and

Telematics

Infrastructure

300 Climatological Stations

67 Meteorological Observatories

15 Radiosonde Stations

12 Meteorological Radars

106 Automatic Meteorological Stations

7 Satellite Image Receiving Stations

30 Automatic Climatological Stations

ComisiónNacional

del Agua (CNA)

ServicioMeteorológicoNacional (SMN)

SMN + CNA

3.300 Traditional Climatological

Stations

20 number 39 // 2 - 2006

How does SMN contribute to the

Mexican and international commu-

nity? In emergency situations does

SMN participate in any crisis com-

mittees? Are there any cooperation

agreements in place with similar

bodies in other countries, such as

the Miami National Hurricane Centre,

in the USA?

SMN represents the initial stage of the

National System for Civil Protection’s

action under emergency hydrometeoro-

logical conditions. The accuracy and

timeliness of information provided by

SMN may save lives. Even exemplary

work by SMN cannot ensure that there

are no fatalities, however a poor job sig-

nificantly increases the probability that

this will occur. Furthermore, SMN is the

guardian of the national climatological

database, which is an essential pub-

lic asset for undertaking many human

activities, including risk calculation in

the insurance sector.

“SMN participates in the

Hurricane Committee of Regional

Association IV (North America,

Central America and the

Caribbean), that has been meet-

ing once a year for the past 28

years to coordinate the next trop-

ical cyclone season.”

SMN represents the country at the

World Meteorological Organization

(WMO) and maintains special direct

contact with the neighbouring countries

of USA, Belize and Guatemala. One

of the most important committees in

which it participates is the Hurricane

Committee of Regional Association IV

(North America, Central America and

the Caribbean) that has been meeting

once a year for the past 28 years to

coordinate tasks and communications

for the next tropical cyclone season.

It is in this WMO body that there is a

special relationship with the US National

Hurricane Centre, which for this inter-

national task is the WMO’s Specialized

Meteorological Forecast Centre. It is

also frequently consulted by the Ministry

of Foreign Affairs when it wishes to

carry out international atmospheric tests

within the country.

“Today, with satellites, it is unim-

aginable that a hurricane could

catch the population unawares.”

During crises relating to tropical

cyclones, SMN plays a vital role in the

group of government institutions that

meet to take decisions and coordinate

actions. In recent years this role has

grown from that of an informant to that

of an advisor on technical decision

making. In the latest tropical cyclone

season it began to participate in other

CNA matters such as videoconferences

between central offices and various

authorities (of CNA and state govern-

ments) in the danger zone. It also sits

on operating committees for water

projects and undertakes evaluation of

schemes for disaster prevention and

climate forums.

How have climate study and the abil-

ity to forecast it improved throughout

the world? What are the principal

challenges that SMN faces in the

near future?

Although scientific meteorology is

a relatively modern science, it has

shown systematic progress over time.

Given the immediate application of its

results to human daily activities, these

advances may not seem sufficiently

rapid, however they are consistent.

Two of the most significant advances in

recent decades have been the advent

of weather satellites (which in the

60s allowed man for the first time to

view meteorological phenomena that

until then had only been guessed at,

deduced or observed in an inadequate

manner). Prior to these advances,

something as basic as knowing whether

or not a tropical cyclone was situated

or not in the Gulf of Mexico was unclear

– it required careful analysis of the scant

available meteorological information.

Today, with satellites, it is unimaginable

that a hurricane could catch the popula-

tion unawares. And now new and excit-

ing advances are coming with satellite

sensors (although it is still incorrect to

claim that satellite information is suffi-

cient to make forecasts).

The other great recent development is

the accelerated increase in the calcula-

tion speed of modern computers. And

the correct word in this context is “cal-

culation” or “computation” as opposed

to the more common “information tech-

nology”. The numerical models of the

atmosphere are perfect examples of the

“creation of new information” (computa-

tion or calculation) as opposed to “the

interview

21number 39 // 2 - 2006

transfer and automatic handling of infor-

mation” (or information technology). It

would be of little use to know the equa-

tions that have governed atmospheric

dynamics for centuries if we were una-

ble to solve them even approximately.

Today, with joint forecasting techniques,

the moment approaches when it will

be possible to give a useful weather

forecast (although far from perfect) 14

days in advance. In the field of climatol-

ogy we are beginning to have the real

ability to forecast beyond the horizon of

a single season (for example, we can

estimate the general conditions for the

coming year), something which is also

important for the insurance sector.

The main challenge for SMN is to keep

up to date in the race for technologi-

cal progress with a size, budget and

structure which, frankly speaking, are

inadequate for the country’s size and

complexity; this must be achieved

without neglecting its necessary every-

day tasks.

Mexico has just hosted the “IV World

Water Forum”, in which there was

an attempt to raise awareness about

water problems throughout the

world. What were the conclusions of

this IV Forum? In your opinion, what

basic challenges does society face in

the management of this asset?

I think that too much is always expected

as regards conclusions from a forum of

this nature. In fact, the main benefit is to

have gathered together many different

participants to talk about water, and for

the purpose of meeting each other and

getting to know the way they think. No,

of necessity the only measure of success

is to obtain a broad consensus and for-

mal agreements. Some of the principal

conclusions reached are as follows:

Population growth is leading the plan-

et to crisis point with regard to water

resources.

It will be impossible to give the entire

world population water supplies simi-

lar to those that the developed coun-

tries give their inhabitants; innovative

solutions that allow more to be done

with less water will be essential in the

immediate future.

Intelligent use of desalination; local col-

lection of rainwater; use of so-called

underground reservoirs or more efficient

agricultural irrigation techniques and a

reduction in leakages in urban distribu-

tion are some of the concepts that will

allow for progress to be made.

Although water is something that can

never be considered to be merely a

product for social, political and eco-

nomic reasons and because of its

status as “essential for life”, in general

the user public will have to pay for

the true costs of operation, distribu-

tion and treatment; if this is not the

case the sector will become decapi-

talized and the problems, serious

now, but alarming for the future, will

not be resolved.

Water problems are closely asso-

ciated with other environmental

problems and the solutions are inter-

related; they include: deforestation,

change in soil use, wetlands, fair and

equitable water distribution through-

out the basin, interconnection of the

water cycle between atmospheric

water, surface water, underground

water and even sea water. As an

example, although desalination

is now achievable at competitive

costs, most of the world’s desali-

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Source: SMN/CNA-México

22 number 39 // 2 - 2006

nation plants are still powered by

non-renewable energy sources and

pump large quantities of greenhouse

gases into the atmosphere. Over the

coming years it will be an enormous

technological challenge to make

these costs competitive with renew-

able sources such as solar or wind

power. These are the solutions that

offer a sustainable future because

they do not create further problems.

With regard to the insurance sector, it

is important to remember that one of

the Forum’s main themes was “Risk

Management”, and in this connection

a discussion document was drawn up

which, although general, proved to be

a good reference point on the specific

problem that we face on water as a

danger and a source of risk.

In my view, one of the main challenges

for society is to convert the numerous

NGO initiatives, well intended as they

may be, but short on technical, scien-

tific and financial backing, into schemes

that when applied on a massive scale

do not produce the same negative

results that traditional technology has

produced in the past.

“It is to be hoped that we can

change our way of life to make it

more in keeping with the environ-

ment, although history does not

show that we are taking this path.”

Planet Earth has experienced climate

change on many occasions. Can you

tell us what makes the current climate

dynamics different from the preceding

ones? Has man’s involvement been

key in accelerating this change?

It is true that we are not experiencing

either the highest or the lowest atmos-

pheric temperature in the planet’s his-

tory, but we are probably at the point

at which temperature conditions have

increased most rapidly, largely due to

emissions of greenhouse gases by vari-

ous human activities. This is precisely

where the difficulty lies, because living

beings are able to adapt themselves to

different environmental conditions; to

achieve this however we need enough

time so that down the generations

those that adapt themselves best to the

new conditions are the most successful

and hence reproduce more. This time,

the speed at which these changes are

occurring does not give those living the

necessary time to adapt and as a result

there will be massive breakdowns or

relocations of different plant and animal

species. Man, due to his intelligence,

has other alternatives with respect to

the rest of the living beings. And so,

it is to be hoped that we continue to

demonstrate our intelligence as human

beings, under increasingly hotter condi-

tions and rising average sea levels, by

not opting for more powerful air condi-

tioners, which will use more energy and

emit more greenhouse gases than is

currently the case, but rather by decid-

ing to build more dykes to hold back

the sea, like those that failed in New

Orleans during Hurricane Katrina.

It is to be hoped that we can change

our way of life and adapt it to types

of building and locations, means of

transport and even styles of dress that

are more in keeping with the environ-

ment, even though recent history does

not show that we are taking this path.

Suffice it to say that a bank in a tropical

city at sea level has exactly the same

design as in a city at higher altitude or

at intermediate latitude, or that west-

ern clothing (suit and tie) has become

interview

Source: SMN/CNA-México

23number 39 // 2 - 2006

almost universal irrespective of the local

climate. As a result, a meeting of bank

executives looks exactly the same in

Helsinki as in San Juan, Puerto Rico,

and exactly the same in summer as

in winter. As a general rule we resist

adapting ourselves to nature and we

try to get our immediate environment

to adapt itself to us. This generates

extremely high energy expenditure and

intensifies the development of the proc-

esses that are driving us toward global

climate change.

How has knowledge and prediction

of cyclone activity progressed in the

short, medium and long term since

the use of satellites for tracking trop-

ical storms?

Tropical cyclone forecasts are gener-

ally short term. The fact is that a true

forecast of trajectory and intensity can-

not be undertaken until the system has

formed. Normally current directional

forecasts are available 120 hours in

advance, although with some element

of uncertainty, especially when the

timescale of the forecast is increased.

With regard to intensity, forecasts only

cover a 72-hour period, and as in the

case of the forecast, advances over the

years have been modest but consist-

ent over time. Today the trajectory of a

tropical cyclone can be forecast up to

72 hours in advance; 10 years ago we

could forecast the trajectory 48 hours in

advance with the same level of uncer-

tainty - we gain about a day’s warning

for every decade. In the case of inten-

sity, improvements have not been so

evident because we still have serious

problems in identifying systems that will

become more intense (such as Wilma)

or sharp declines, with any degree of

anticipation.

In the long term it is not possible to

forecast individual tropical cyclones but

rather the expected level of cyclonic

activity throughout the season, some

months in advance. Performance is

moderately good, i.e. it is useful to

consider these predictions instead of

using the alternative (normal climato-

logical values). The forecast of the total

expected cyclonic activity in any given

area is not very useful for the local

decision-making process. As an exam-

ple, 2004 was a very active season

in the North Atlantic and at the same

time extraordinarily inactive as regards

Mexico directly.

“Some models are beginning to

appear, however, that are statisti-

cally competitive with the official

version.”

One important change that has

occurred relates to the inroads made

by numerical models in forecasts.

Currently, the official forecast of a cen-

tre like Miami is a subjective combina-

tion (by specialized meteorologists) of

the objective results of about 15 differ-

ent numerical models. Until recently, the

official forecast (with human interven-

tion) was statistically superior to any of

the individual models. Some models are

beginning to appear, however, that are

statistically competitive with the official

version. These are, generally speaking,

models that are in turn an optimized

combination of several individual mod-

els (now prepared without direct human

intervention).

I believe that this is the future – the use

of “assembled models”, each of them

with “sets of figures” with data that

deviate slightly from the measurements.

In fact, this technique, although not

so called, began to be used intuitively

in respect of tropical cyclones before

being used in the general weather fore-

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Source: SMN/CNA-México

24 number 39 // 2 - 2006

cast. If computer manufacturers believe

that they can produce faster hardware

than any human being requires, here

is the acid test. We can still use much

more computing power on this type of

problem than that which is currently

available.

Mexico is especially vulnerable to

tropical storms, on both the Pacific

and Atlantic coasts. What are SMN’s

estimates of the frequency and inten-

sity of tropical cyclones in Mexico in

2006? What are the likely trends for

future years? What predictions can

be made about the frequency and

intensity of tropical storms around

the world?

The forecast bulletin on cyclonic activ-

ity that SMN issued at the beginning

of April 2006 indicated that the 2006

season would be significantly more

active than normal in the North Atlantic

with 17 named systems (i.e. that would

attain the category of “tropical storm”), in

comparison with the 9 or 10 that is con-

sidered normal, measured as an average

over many years. In the Northeastern

Pacific a slightly less active season than

normal is expected, with 11 named trop-

ical cyclones as opposed to a normal

figure of 14 to 15. The forecast issued

for the North Atlantic agrees exactly with

the specialized group founded by Dr

William Gray of Colorado State University

and agrees qualitatively with NOAA’s

forecast from USA. In the case of the

Northeastern Pacific, this is our own

methodology, however it agrees quali-

tatively with the forecast that NOAA has

prepared for this area.

“On a global basis, the total

number of tropical cyclones that

occur each year is surprisingly

constant, as if the variation in

one region were absorbed by

opposite behaviour in others.”

Looking beyond 2006 it should be

noted that the current temperature of

the surface of the North Atlantic, which

is higher than normal and obtained from

a long-term average, is set to remain

high for at least a further few years,

given the behaviour of this fluctuation

in the North Atlantic. Some research-

ers believe that it will continue for more

than a decade. Under these conditions,

seasons are expected to be more active

than normal on average, although,

naturally, each one may be affected by

key factors (if, for example, there were

to be an intense “El Niño”, that season

would tend to be of lower activity in

the North Atlantic). With regard to the

Northeastern Pacific, frequently this

behaves in the opposite manner to the

North Atlantic, and as a result the forth-

coming seasons should be between

normal and low in that ocean region.

On a global basis, the total number of

tropical cyclones that occur each year

is surprisingly constant, as if the vari-

ation in one region were absorbed by

opposite behaviour in others. From this

point of view, therefore, I expect the

number of tropical cyclones around the

world to remain constant in the next

decade. Global warming may well have

a marginal effect and tend towards

greater frequency, greater intensity, or

both; as yet there is still no clear evi-

dence in this regard.

I am aware that the opinion that I

have just expressed flies in the face

of what (sometimes rashly) is widely

commented on in the media and even

in some scientific journals. However I

am a firm believer that the increase in

natural disasters that we are witnessing

(number, frequency, cost, etc.) is largely

due to the fact that the vulnerability

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Source: SMN/CNA-México

25number 39 // 2 - 2006

and exposure of society are increas-

ing much faster than any effect that

climate change and specifically tropi-

cal cyclones may bring about. There is

a single exception: the almost certain

increase in sea levels will have a direct

effect on the severity of the damage

from storm tides, even when this is at

the very lowest estimated level (say 10

to 100cm by 2100).

“The increase in natural disasters

that we are witnessing (number,

frequency, cost, etc.) is largely

due to the fact that the vulner-

ability and exposure of society

are increasing much faster than

any effect that climate change

and specifically tropical cyclones

may bring about.”

Tropical storms cause damage not

only by strong winds, but also by

surges, storm tides and the heavy

rainfall that accompanies them. In

2005, Hurricane Wilma dumped rain-

fall of more than 1,000 litres/m2 in

less than 12 hours and more than

1.500 litres/m2 in 24 hours on cer-

tain areas of the State of Quintana

Roo. To what extent do you view the

Saffir-Simpson scale, based on the

maximum sustained wind speed,

as adequate for classifying tropical

storms?

In addition to wind there is also dam-

age caused by surges, storm tides and

rain. In the case of the first two causes

there is a strong correlation with wind

strength, however they are also influ-

enced by the size of the storm, speed

of passage and by the coastal geogra-

phy and the depth of the waters in the

coastal region. In the case of rainfall,

the matter is considerably more compli-

cated and for this very reason there is a

need for an index to classify a tropical

cyclone according to its danger, as this

is not closely related to wind strength.

“The problem lies in finding an

objective and reliable method

of assessing a given tropical

cyclone’s capacity to generate

rain. For the moment no reliable

way of measuring a cyclone by

its rain has been found.”

The problem lies in finding an objec-

tive and reliable method of assessing

a given tropical cyclone’s capacity to

generate rain. Measurements over the

sea are not always maintained on land

(in fact, radar measurements seem

to show that rain intensifies once the

cyclone reaches land). Furthermore,

total accumulated rainfall in a given

point depends inversely on the speed

of passage, but also in dramatic fashion

on the topography and relative orien-

tation of the mountains and the local

trajectory of the wind. For the moment,

therefore, no reliable way of measuring

a cyclone’s capacity to generate rain

has been found. It remains a pending

task for both researchers and on an

operational level.

Hurricane Wilma lashed the Yucatán

Peninsula in October 2005 and

turned out to be the most eco-

nomically costly insured hurricane in

Mexico to date. Can you enumerate

the lessons learnt from Wilma?

The most important lesson is that

decision taking with sufficient time to

carry out the necessary actions, even

though this means taking them when

there is significant uncertainty, makes

the population feel safe. In this spe-

cific case the toll was practically zero,

even though when it came ashore it

was a category 4 hurricane on the

Saffir-Simpson scale, similar to Katrina

when it hit New Orleans. But this is not

always so. A year previously, Hurricane

Ivan passed by with a trajectory similar

to that of Wilma, although at a dis-

tance of 200km from Cancún. Given

that it was forecast that it would veer

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Source: SMN/CNA-México

26 number 39 // 2 - 2006

towards the Yucatán Channel, the nec-

essary evacuations did not take place.

Fortunately at the last moment Ivan

veered off in an asymmetrical fashion

to the right, only causing dangerous

conditions in Cuba. Had this not been

the case the population in the extreme

northeast of the Yucatán Peninsula

would have been in serious danger. It

is important to note that in both cases

uncertainty indicated the need for

evacuation.

“Not all damage can be blamed

on the instantaneous maximum

wind speed as the phenomenon

develops. Some progressive

damage is magnified by the dura-

tion of the dangerous conditions,

in addition to the extensive accu-

mulated rainfall.”

Another lesson is that the extraordi-

narily slow speed of passage (as low

as 3kph), which allows the dangerous

conditions to remain for long periods in

the same place, have a bearing on the

damage. Not all damage can be blamed

on the instantaneous maximum wind

speed as the event develops, as some

progressive damage is magnified by the

duration of the dangerous conditions, in

addition to the extensive accumulated

rainfall.

The level of damage was also surpris-

ing as a result of the surge/storm tide

in the business sector of the island of

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27number 39 // 2 - 2006

Cozumel, which runs along the island’s

coast facing the continent that lies only

20km away. For this small area lashed

by wind and sea the damage was sur-

prisingly high – tropical cyclones always

cause surprises.

In comparison with Hurricane Gilbert

in 1988, which is analysed in your

book Destructive Effects of Tropical

Cyclones, Mapfre, 1998, which

human, financial, urban and scientific

aspects do you feel have changed?

Many things are different. In 1988

when Gilbert struck the same region of

Mexico there was a nascent National

System of Civil Protection, which until

that moment had in no way high-

lighted the risk of tropical cyclones.

Today Cancún, with its tourist area,

is probably one of the best prepared

regions against tropical cyclones in the

world, almost certainly the best in the

Caribbean.

“Cancún, with its tourist area,

is probably one of the best pre-

pared regions against tropical

cyclones in the world.”

With Wilma, although the financial dam-

age was quantitatively very high, in

terms of quality the damage was less

“structural” than in the case of Gilbert

in 1988. Generally speaking, construc-

tion quality in the area has improved

significantly, although now, with much

greater economic value exposed than

in 1988, the value of the damage has

surpassed that historic case. Cancún’s

principal vulnerability remains its original

one: the extraordinary proximity of man-

made structures to the coastline. In the

new Riviera Maya area, to the south of

Cancún, this situation has been largely

rectified.

The global community is experienc-

ing ever more natural disasters with

high human, financial and insured

costs, and climate and weather are

the causes of many of them. Mexico

is not a stranger to this situation.

What can SMN do to prevent, antici-

pate or mitigate the damage caused

by natural disasters? Is there an

exchange of information between

SMN and the insurance sector?

In order to reduce the danger to the

population itself, SMN above all else

should continue to improve the quality

of its human resources and also ensure

that it has the appropriate equipment to

carry out its duties efficiently. To reduce

material damage and increase develop-

ment sustainability, it should be even

more involved in government decisions

relating to the areas exposed along

the length of the coastline. One of the

ways of achieving this greater involve-

ment is by impressing on the minds of

all decision takers and local authorities

the physical realities of the phenomenon

that they will face sooner or later. This

should be done concisely and in clear

language, ideally before the decisions

leading to vulnerability have been taken

or implemented. This includes the tour-

ist sector, relevant bodies of the fed-

eral, state and municipal governments

and even executives of private sector

organizations.

With regard to cooperation with the

insurance sector, the most common

relationship is that of supplying past

and/or current information to enable

them to assess the applicability of an

insurance policy. There has also been

cooperation with an insurance agency

of the federal government for the pur-

pose of making the policies offered to

some Mexican agricultural sectors more

precise, and this has produced excel-

lent results for both parties.

There is also a large quantity of stud-

ies that it is necessary, advisable and

possible to execute and which would

give valuable results for the insurance

sector. SMN knows what needs to be

done and how to do it, however most

of these studies have been unable to

be executed for lack of internal human

resources, or alternatively, lack of

budget or appropriate guidelines to out-

source them. In this regard, by means

of cooperation agreements with the

insurance sector, many of these stud-

ies could be carried out. Clearly there

would need to be respect for SMN’s

philosophy and policies on the public

nature of the data and the resulting

products.

interview

28 number 39 // 2 - 2006

Is a MAPFRE RE publication. Chairman: Juan Antonio Pardo. Editor: Ramón Aymerich. Coordinator: Carmen Cejas. Editorial Board: Esther Cerdeño, Pedro de Macedo, Lorenzo Garagorri, Juan Mayo, Luis de Mingo, Enrique Orsolich, Faustino Pérez, Eduardo Pérez de Lema, Mª Teresa Piserra, Juan Luis Román, Javier San Basilio, Eduardo Sánchez, Juan Satrustegui. Technical Coordination: ITSEMAP Servicios Tecnológicos MAPFRE, S.A. Design: Tau. Publisher and Printer: Gráficas Palermo. ISSN: 1137-246X. Deposito Legal: M. 33.551/1996.

TRÉBOL MAGAZINE contact address: We now have an exclusively dedicated email address trebol@mapfre.com for TRÉBOL readers to contact us with their feedback,suggestions, letters and requests that will reach the Management and Board of this publication. We also invite your commentson the technical content of articles and interviews published that will be relayed, when relevant, to the respective authors.

COURSES ORGANISED BY ITSEMAP TECHNOLOGICAL SERVICES MAPFRE (2006)

agenda

Denominación del curso Fecha Ciudad País

Practical fire fighting course for the implementation of Emergency Plans

26-27 de octubre October Spain

Emergency plans for compliance with prevention of risks in the workplace in non-industrial activities.

6-9 November Málaga Spain

Assessment of contaminated soils within the framework of Royal Decree 9/2005 (preparation of preliminary status report).

7-8 November Málaga Spain

Programme of regular inspections and supervision of the mainte-nance of fire protection facilities.

14 November Madrid Spain

Environmental risks within the framework of environmental damage liability

15-16 November Oviedo Spain

Practical fire fighting course for the implementation of Emergency Plans

16-17 November Gijón/Pontevedra Spain

Assessment of contaminated soils within the framework of Royal Decree 9/2005 (preparation of preliminary status report).

23-24 November Barcelona Spain

Contingency plan, preventive solution for interruption of business activities.

23-24 November Madrid Spain

Prevention and emergency plans for events and establishments involving large numbers of people.

29-30 November Madrid Spain

Assessment of contaminated soils within the framework of Royal Decree 9/2005 (preparation of preliminary status report).

13-14 December Madrid Spain

COURSES ORGANISED BY MAPFRE RE (2006)

Denominación del curso Fecha Ciudad País

Risk and insurance in construction 24 October Barcelona Spain

Risk and insurance in construction 26-27 October Santiago de Chile Chile

Risk and insurance in construction 30-31 October Buenos Aires Argentina

The risk of business interruption (english) 29-30 October Manama Bahrain

The risk of business interruption (english) 2-3 November Istanbul Turkey

Risk and insurance in construction 9-10 November México, D.F. México

Risk and insurance in construction 13-14 November Caracas Venezuela

Risk and insurance in construction 16-17 November Bogotá Colombia

Environmental risks in the companies and the insurance 28 November Madrid Spain

Risk and insurance in construction 12 December Lisboa Portugal