Dear readers I’m sharing this article that I published on the LatAm Insurance Review March 2015.
Lessons to learn after 27-F Earthquake
I often hear the term “lessons learnt” as if the sole act of experiencing a disaster, suffices the whole learning process. I bring this to notice because after the 8.8 Richter earthquake that struck the central part of Chile, on the 27th of February 2010, most of the risk managers or policy advocates declared that lessons were learnt. Well, the purpose of this brief comment after 5 years of this natural event, is to present some of the implications and lessons that Chilean risk managers are learning; after all you never stop learning, right?
First, as context, some facts and figures about this socio-natural disaster. On the economic perspective Chile suffered losses for nearly a 17% of its GDP, which comes to almost US$ 30 billion, of which 27% or US$ 8 billion, where insured mainly in commercial and industrial property. According to a study of the Forensic Medical Service (Nahuelpán & Varas, 2010) there were 512 direct victims of the earthquake and tsunami. The shock of this losses plus the judicial process that still is taking place due to possible neglected actions of the government and the national emergency offices, raised awareness of the need to dramatically improve the way risk was managed in the country.
Before the 2010 Chilean earthquake, risk management was understood mainly in two ways: risk transfer and corrective disaster risk management (UNISDR, 2009). Chief Financial Officers where the key actors in transferring risk at a commercial and industrial level through the insurance market, primarily because risk was understood as financial loss and; on a more radical view, biased by the idea that disasters where unavoidable reflected in the use of the term natural disaster –we will see later that disasters aren’t natural but socio-natural-. Strict constructive standards, influenced by the recurrent seismic activity in Chile, it’s still a stronghold of the way disaster risk is corrected in the country, setting an example that has raised the attention of other earthquake prone nations.
Unfortunately, disaster risk management based on these two pillars, proved insufficient to cope with an event such as the “27F earthquake”; as Chileans name it. Reasons for the former abound and somehow are diffused, I dare to presume this can be explained by the fact that risk management, besides financial risk management, it’s not a professional activity in Chile hence the implications derived usually are sustained in opinions more than in facts and knowledge. This brings my first lesson to learn from this event, the need to implement educational programmes on graduate and postgraduate level. If we want to have CRO’s –in Chile this position practically doesn’t exist in the organizations- managing risks instead of CFO’s, it’s imperative to develop and implement formal studies to manage and raise awareness of risk management.
I’ve always believed you should lead by example. Under this premise, something that became evident after 27F, and hasn´t been tackled, is the lack of Business and Government Continuity Plans particularly in public owned companies. There´s a huge space for improvement in this topic, therefore I believe the government should act decidedly to adopt and implement BCP’s for their companies, leading by example on this critic issue.
Finally, the most important lesson to learn from this experience is the need for better public-private cooperation and synergy in risk management topics. There’s a lot of experience and resources –physical and intellectual- allocated on the private sector that, without doubt, could improve the way the government and vice-versa could reduce risk and vulnerabilities in the Chilean society.
Ulrich Beck, who recently passed away, left us with a final reflection about the emancipatory side effect of global risk (Beck, 2015), this means that we should see the positive side effects of bads. Let me rephrase it, every crisis it’s an opportunity. Therefore, I’m a firm believer that after 5 years from one of the biggest earthquakes measured by mankind, the role and trade of managing risks still has a big opportunity to keep improving the way we deal with socio-natural disasters.
4DRR.com 