1) Country risk management involves identifying, assessing, and implementing prevention, mitigation, and adaptation strategies for natural disasters, with balanced allocation of funds between prevention/mitigation and post-disaster response. 2) Economic losses from natural catastrophes have significantly exceeded insured losses globally, highlighting the protection gap. 3) Risk transfer tools such as catastrophe bonds, index-based insurance, and parametric contracts have increasingly been used by public entities to finance post-disaster costs and support adaptation.

1. a
Country risk management
and financial preparedness
for disasers
IDRC Conference, Davos, 28 August 2012
Martyn Parker
Swiss Re Global Partnerships | August 2012

2. The fundamentals of Country Risk
Management
a
Prevention
Identification Assessment and Adaptation
Mitigation
Severity
(in USD) Tsunami  Prevention and mitigation strategies must be
billion
>10
the first priority
Earthquake
Financial preparedness for the residual risk
billion

3-10
must be considered
Pandemic
billion
Balanced deployment of public funds between
1-3

Typhoon prevention/ mitigation and adaptation
Coastal flooding
0.1-1.0
measures is key
billion
Drought  Ex-ante financing instruments for adaptation
million
<100
include reserve funds and a variety of risk
below above
transfer instruments
illustrative 1%
1-5% 5-10% 10-20%
20% Likelihood
Swiss Re Global Partnerships | August 2012 2

3. a
Catastrophes losses are rising globally -
massive gap between economic and
insured losses
Natural and man-made catastrophe losses 1981-2011, in USD billion
Insured losses Economic losses
350
300
250
200
150
100
50
0
1981 1986 1991 1996 2001 2006 2011
Note: Loss amounts indexed toand business interruption, excluding liability and life insurance losses
Insured losses: property 2009 Source: Swiss Re, sigma No 2/2010 Source: Swiss Re, sigma No 2/2012
Swiss Re Global Partnerships | August 2012 3

4. Risk transfer tools increasingly important
to the public sector
a
Natural catastrophes Alabama
ParktonRe
Weather / Agriculture (North Carolina (Alabama
Hurricane) Hurricane)
Health First US First US parametric
transaction transaction
GlobeCat Agroasemex
Cat-Mex Beijing Tamil Nadu
(Guatemala & El Vegetation
(Mexico Municipal (Health
Salvador Cover
Earthquake) (Crop Insurance) Insurance)
Earthquake) (Satellite
First sovereign First Asian Microinsurance
First charity cat drought
cat bond transaction health solution
bond insurance)
2006 2007 2008 2009 2010 2011
CCRIF MultiCat
Malawi Weather MiCRO
(Caribbean (Mexico
Derivative Vietnam (Haiti
Earthquake and Earthquake and
(Parametric (Agricultural Yield Catastrophes)
Hurricane) Hurricane)
Drought Index Cover) Microinsurance
First multi-country New global cat
Insurance) Facility
parametric facility bond platform
Swiss Re Global Partnerships | August 2012 4