As the risk landscape shifts and the devastation from pandemics and weather events are at the forefront of peoples’ minds, there is an opportunity and an imperative that governments and the (re)insurance industry find new means to partner. By leveraging risk management and risk transfer expertise, such partnerships can help communities build greater resilience and recover more quickly when catastrophes strike.
Governments should seek a full, candid view of the critical risks to which their jurisdiction is exposed, regardless of whose responsibility it is to manage them and the challenges of aligning on, and implementing, an effective response. But establishing how to prioritize risk management initiatives, particularly across sectors, can be difficult. A new report from Marsh & McLennan Advantage, Building National Resilience, explores how countries can build frameworks to assess a variety of intersecting, nation-level risks, including stretched health systems, technology governance struggles and biodiversity loss. Marsh & McLennan Advantage is an affiliate of Guy Carpenter.
Categorizing risks both by their origin and by their attributes provides transparency on the diversity of risks and acts as a useful counterweight to the pressures of recent events and political agendas that can skew resources excessively towards particular risk types. It helps balance the urgent with the strategic: in other words, near-term concerns for citizen safety and business disruption against longer-term considerations relating to national security and economic competitiveness; or, from another perspective, unique local challenges against international commitments (such as the sustainable development goals).
To develop context around these risks, advanced economies (such as the United States and the United Kingdom) often conceptualize their risk agenda over three timelines. They have a national security strategy with an outlook of between five and 20 years (or more), a national risk assessment exercise with a time horizon of between one and five years, and a crisis anticipation function that briefs on critical concerns for the coming months. In principle, this enables governments to formulate a long-term investment agenda, build capabilities and strategies for priority known concerns, and respond promptly to sudden shocks or rapidly deteriorating conditions.
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.