Cover stories

Lowering catastrophe vulnerability in Latin America

The movement of the earth, which also causes the earthquakes and volcanic explosions, has shaped the geography of South America. The Andes Highlands in Chile, the Macchu Picchu ruins in Peru, the coffee produced in the Colombian Zona Cafetera and the natural hot springs in Tungurahua, Ecuador, are all by-products of the internal activity of our planet.

Those same factors have created the conditions that humans have found conducive to living since our hunter- gatherer forefathers became farmers.

Water sources have been vital, as have the fertile lands close to them. People often settle in the shadows of mountains for a combination of reasons, including mild temperatures and an abundance of natural fertilizers. These were often the result of the ashes from pyroclastic flows and the erosion of magmatic rocks, found in the proximities of volcanoes, which are areas prone to earthquakes.

The world’s oceans are another abundant food source; nonetheless coastlines may be vulnerable to the occurrence of tsunamis, hurricanes, flooding, and red tides.

However, this means that more than 75% of the world’s cities are vulnerable to at least one natural catastrophe, according to the United Nations Office for Disaster Risk Reduction (UNISDR). With half the world’s population living in urban areas, a number that keeps rising, more and more people are exposed to natural catastrophes.

Now global initiatives are aiming to improve the ability of cities and people to withstand catastrophes. The Millennium Development Goals included a change to a focus on risk reduction, from the former emphasis on disaster response.

The Making Cities Resilient Programme is an initiative from the UNISDR to increase resilience of communities to catastrophes, through education, planning and the establishment of role models, with the support of the local governments and the private sectors.

Latin American cities that have joined the Making Cities Resilient Programme include Rio de Janeiro, Sao Paulo, La Paz, Bogota, La Plata, Lima and Mexico City.

These cities are now undertaking a number of measures in order to become safer and reduce their overall risk. These include installing a public early warning system, investments in education, the execution of periodic evacuation drills and the implementation of lessons learned from other cities.

The insurance industry is playing its part too, both through donating its resources and by utilising its expertise in risk transfer and risk management.

The industry has played a role in technical improvements, such as the use of Geographical Information Systems, the implementation of risk management processes, the understanding of risks, the use of modelling tools, and the adaptation of foreign good practices.

In addition, risk awareness has increased dramatically and risk managers have worked with insured companies to develop creative mechanisms to cope with losses while reducing the overall risk of their portfolios.

Strategic alliances have been formed with local governments and experts, as well as universities; these have allowed companies insured to understand the hazards they are exposed to. The industry has also sponsored several studies and the conclusions have been applied to the design of risk management practices to minimize both perils and their losses.