The reinsurance market has established itself as a capable private partner for the public sector in recent years. Putting the capital and capabilities of the reinsurance sector to work to create new coverages and meet evolving demands from public sector entities is a crucial component for reducing disaster suffering. At a time when governments worldwide are forced to bear a growing share of losses and face multiple challenges in funding increasing costs associated with aging populations, higher debt, labor force limitations, supply chain interruptions and economic losses resulting from business closures, countries can make important progress in quantifying and mitigating risks by working closely with reinsurance carriers and intermediaries.
A new report from Marsh & McLennan Advantage Executive Directors Richard Smith-Bingham and Alex Wittenberg and Public Sector Managing Director Daniel Kaniewski, Building National Resilience: Aligning Mindsets, Capabilities and Investment, explores the key challenges and priorities for national governments in a rapidly shifting risk environment, studies government risk management arrangements and explores key policy levers and solutions for improved outcomes.
Building preparedness for risks that may threaten national security, economic prosperity, and societal wellbeing is a critical function of government. And the need for effective arrangements at the heart of government has rarely been as evident as it is now.
The COVID-19 crisis is forcing countries across the globe to grapple with emergency healthcare provisions, challenging citizen behaviors, widespread industry disruption, and broader economic consequences. This has stretched all dimensions of national risk and crisis management arrangements, including risk assessment, policy response evaluation, leadership decision-making, public communication, financial support interventions, and the coordinated implementation of initiatives.
While for many countries this may represent one of the most acute challenges of the twenty-first century, today’s more complex risk environment (with challenges ranging from cyber to climate) is already putting traditional national risk governance approaches under considerable pressure, demanding new behaviors, interactions, and solutions.
The new report explores the key challenges and priorities for national governments in this rapidly shifting risk environment, reviews government risk management arrangements. The report also explores key policy levers for improved outcomes and advises on potential solutions including:
- How governments can assess the investment gaps needed to improve physical infrastructure resilience
- The instruments involved in sovereign risk transfer initiatives
- Opportunities for continuous improvement and the value of an overall “risk champion” within government.
Guy Carpenter is fortunate to be able to collaborate with Marsh & McLennan Advantage and other Marsh & McLennan businesses Marsh and Oliver Wyman, in building an understanding of public sector risk’s impact on the primary market and wider financial system. Marsh & McLennan Companies is at the forefront of conversations to create a forward-looking (re)insurance solution for pandemic risk in conjunction with policyholders, (re)insurance markets and key policymakers.