October 29 marks a grim anniversary – it is exactly one year since Hurricane Sandy hit New York City after making landfall in New Jersey. The hurricane showed us just how susceptible modern societies and metropolitan areas are to the impact of natural catastrophes. And in the north-east it was a reminder that we are not immune.
The hurricane killed 72 people in eight states and caused $68bn in damage. Across the New York metropolitan area, the storm inundated dozens of tunnels and subway stations disrupting public transport links for months. Shortly after the storm, New York Governor Andrew Cuomo convened the NYS 2100 Commission to provide recommendations for a more resilient New York. Mayor Bloomberg created the Special Initiative for Rebuilding and Resiliency to do the same for New York City.
Hurricane Sandy generated enormous recovery costs. The recovery time also had a significant impact on the US economy since the metropolitan area of New York produces about 8% of the nation’s total economic output. While Sandy laid bare the disaster risk faced by a world city like New York, it is worth noting that Sandy was only an average storm when measured in terms of wind force. The next major hurricane could be a lot worse if wind strengths are higher or its point of landfall is different.
In mid-September a Swiss Re study called "Mind the Risk" ranked the natural catastrophe risk faced by 616 urban areas in terms of potential human and economic costs. Los Angeles and New York ranked among the top American cities under threat from natural disasters. In Los Angeles, over 15 million people would be potentially affected in such an event, a number which comprises fatalities, injuries, evacuations and work disruptions.
Swiss Re has also found that residents of catastrophe-exposed areas in the US are generally well aware of the dangers from natural catastrophes. Our Global Risk Perception Survey, results of which were released this August, asked more than 20,000 people around the world to rate the risks they faced. Los Angeles respondents estimated the risk of an earthquake or tsunami more highly than residents of any other metro area surveyed. Miami and New York residents were the most concerned about being hit by a powerful storm. And respondents from all three cities who had experienced a natural catastrophe named insurance as their main source of recovery.
Put very simply: areas that have insurance coverage recover quicker than those that don't when an event strikes. Only a small minority rated the risk reduction measures taken by the government or local authority as "very good" which shows that there is still significant proactive work to be undertaken to make our communities safer.
However, the insurance sector has obvious limitations – it cannot allocate infrastructure investment, for example, or write building codes, or demarcate the areas of settlement. Greater resilience will come from cooperation between public and private sectors. We must work together to meet the increasing risk to lives and livelihoods engendered by increasing urbanization, ever-present natural catastrophe risk, and the uncertainties presented by climate change. No one sector can do this alone.
The industry is doing its part not only by sharing its research and information with the public as in the surveys and studies mentioned above, but by taking that knowledge and applying it for positive change. For this reason Swiss Re has joined with the Rockefeller Foundation to help build resilience in at least 100 cities. Through the initiative, the 100 Resilient Cities Centennial Challenge aims to hire a Chief Resilience Officer (CRO) for each candidate city. The CRO will be empowered to create a resilience strategy and make use of a range of tools, technical support, and resources for implementation of that strategy – including access to innovative finance for infrastructure development.
A CRO can focus attention on the measures needed to protect his or her city from extreme weather, seismic events or terrorism. Why the focus on cities? Because by 2050 an estimated 75% of the world’s population will live in them – making urban resilience an imperative of the 21st Century. When disaster strikes cities are affected on a larger scale due to population density and concentration of high economic value. Through planning, foresight, and better investment, cities can dramatically mitigate these impacts.
It is our deep conviction that we should be preparing for disasters before they happen, rather than responding after the fact. Preparation can reduce human suffering, protects property and preserves economic stability as well as speed up recovery. Swiss Re can make a unique contribution to the CGI program with practical risk management insight and tools, including CatNet, our state-of-the-art risk assessment tool. The insurance industry can also look forward to bringing its expertise to bear in helping to define the role of CROs, and supporting the development of the CRO network.
Residents of American cities are aware of the risks they face. Indeed, some city leaders, like those in New York, are at the forefront of assessing the threats posed to their cities by severe weather events. This is demonstrated by their initiative earlier this year which Swiss Re played a key role in.
But now is the time for the private and public sectors to stop simply talking about ways to increase societal resilience and to turn words into action. It will take constructive, long-term and collaborative efforts from private and public sectors to prepare. Some people question whether we can afford to make our cities more resilient. My question to them is can we afford not to?