Catastrophe risk management institute launched in Singapore

Today Online 22 Jan 10;

SINGAPORE - The Nanyang Technological University (NTU) has launched the Institute of Catastrophe Risk Management (ICRM) to help the international community better understand the characteristics of risks related to natural disasters such as earthquakes and tsunamis, as well as non-traditional risks including infectious diseases and terrorism.

Supported by the finance, insurance and reinsurance industry, ICRM will develop models and tools to allow governments and the industry to analyse potential losses and develop risk-management strategies.

It will allow decision-makers worldwide and Asia in particular, "to use such tools to identifyvulnerabilities, prepare for arange of possibilities and allocateresources", said NTU yesterday.

Recent studies indicate that occurrences of natural catastrophes are on the rise, said Mr Heng Swee Keat, Monetary Authority of Singapore managing director, at the institute's launch yesterday.

Asia's geographical position makes it "vulnerable", but many Asian countries are not well prepared.

Institute to study cost of disasters
It then hopes to find ways to cut damage
Amresh Gunasingham, Straits Times 22 Jan 10;

THE destruction in Haiti underscores the need for governments to better understand the risks associated with natural disasters.

A new research facility at the Nanyang Technological University (NTU) is trying to do just that by studying the long-term cost of disasters in the region, which have become more common and destructive in the past few years.

From there, the Institute of Catastrophe Risk Management hopes to come up with proposals for governments to reduce the amount of damage caused by colliding tectonic plates.

The institute, set up at $35 million, will house 15 experts from various disciplines such as science, policy planning and finance. It aims to raise $50 million over the next five years to fund its research.

In every disaster, apart from the immediate loss of lives, there is significant damage to infrastructure, health care and utilities.

A recent study by global re-insurer Munich Re showed that in 2008, 750 natural disasters around the world cost countries US$200 billion (S$280 billion) in economic losses.

And the incidence seems to be rising.

The number of major weather-related disasters has tripled since the 1980s. In 2008 alone, an estimated 160,000 lives were lost in natural calamities such as earthquakes, tsunamis and floods.

Professor Haresh Shah, a member of the NTU's board of trustees, said a multi-disciplinary field is needed to develop disaster mitigation strategies.

'The kind of research we are doing has a very poor database in Asia. We are going to create a clean, reliable and robust database of all catastrophes, historical and current, so that researchers can understand what has been going on,' he said.

'Once that is understood, we can start looking at what can be done today to mitigate that risk.'

Asian communities are often poorer than Western nations, and also hit harder by the elements, said Prof Shah. In this regard, one major focus of the research will be in micro-insurance, insurance strategies tailored for the poor.

The Munich Re's study said that only 5 per cent of the US$200 billion economic loss incurred in 2008 was covered by insurance.

Catastrophe risk coverage remains relatively unpopular in the region.

Speaking at the opening of the institute, Mr Heng Swee Keat, managing director of the Monetary Authority of Singapore, noted that most countries in the region had a more reactionary stance to catastrophes, preferring to cobble together emergency relief efforts after disaster has struck rather than preparing early.

It would take greater public awareness and a willingness to act for more countries to be like quake-prone Japan, where extensive data gathering has translated into comprehensive disaster mitigation policies.

Said Mr Rowan Douglas, managing director of global reinsurer Willis Re: 'Fundamentally, we have to try to answer the question of what is the maximum possible loss this region could suffer in the next two centuries.

'This will dictate where capital is allocated, where we think hurricanes, for example, will occur, and where governments will spend in future.'

He added that Singapore has a role to play in developing the nascent risk insurance industry in the region.

'The fact of the matter is we will require a hub in this region to connect with South-east Asia and beyond...so as to concentrate fragmented expertise in the region and integrate it into public policy and financial markets.'