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LONDON — An increased focus on risk resilience and disclosure by companies of the disaster risks they face would create an environment where the private sector and governments can more effectively respond to climate change, said Britain's Prince Charles.
“Truly sustainable development has to be founded on the principles of resilience and a proper appreciation of risk,” said Prince Charles, speaking Wednesday at the International Insurance Society's 50th Annual Seminar. “But they in turn are underpinned by fundamentals such as systems health, ecosystem functionality and the need for all of humanity to live in harmony with the environment.”
And the financial sector can help strengthen resilience efforts, he said.
“Banks, financial institutions, insurance companies and institutional investors all have a role in assessing the risks to their businesses posed by climate change and natural disasters,” Prince Charles said.
Advances in climate science and big data make it easier for organizations to assess their risks, he said.
“A comprehensive understanding of risk, including the risks of climate change, the food-water-energy nexus and resource scarcity is now increasingly straightforward,” Prince Charles said.
And details on those risks should be disclosed, he said.
“I can't help thinking that the disclosure of disaster risk on companies' balance sheets, and indeed those of nations, would certainly concentrate the mind,” Prince Charles said.
Corporations should make disaster risk information public in their corporate filings, said Dominic Casserley, CEO of Willis Group Holdings P.L.C.
“Companies should report publicly on what resilience they have against natural disasters,” he said at the IIS seminar.
Such a requirement would give companies incentives to build resilience “making themselves stronger and better positioned for growth,” he said. This would encourage global economic growth and strengthen communities around the world, he said.
The insurance sector in particular can help address climate change and increasing natural disasters, said John Nelson, chairman of Lloyd's of London.
“There is a shared belief that the insurance sector must work with its clients to understand and mitigate the risks posed by climate change,” he said.
In addition, catastrophe risks often are not covered by insurance in developing areas of the world, and the insurance industry should work with governments to increase the penetration of insurance, he said.
“This will drive better mitigation policies, quicker recovery and improve the sustainability and the resilience of economies,” Mr. Nelson said.
Governments and insurers have a shared interest in reducing the cost of catastrophe and should share data. Subsidized insurance pools may also have a role to play in brining affordable insurance to developing countries, he said.
“However, new properties should be excluded from such schemes, as there is no reason to build in threat-exposed areas,” and properties built there should be built to such standards that they can withstand natural disaster exposures, Mr. Nelson said.
LONDON — With reinsurance market conditions changing, reinsurers need to adapt to succeed, a group of industry executives said Tuesday.