Riskier Or Safer Place?
KENNETH FEINBERG
ADMINISTRATOR
BP DEEPWATER HORIZON DISASTER
VICTIM COMPENSATION FUND
The world is becoming a riskier place. This is probably inevitable with the 21st-Century impact of globalization,
the end of the Cold War, the technological
revolution—changes that are most beneficial,
but which carry with them considerations of
risk and uncertainty. Empowerment of peoples and nations in the 21st Century is also
fraught with peril. The question is whether
existing institutions can cope with change.
Risk is the flipside of progress.
I don’t think there is much question that as
far as what we can control, the world is safer.
Better technology, better architecture, better medical resources all contribute to that. But two factors
may obscure those improvements: First, we insure
more, and thus financial losses grow. Second, we
appear more willing to accept risk. Thus, we knowingly concentrate building and development in key
hurricane exposures or in flood zones or near earthquake fault lines. You have to ask: Do we trade our
technological advancements to simply live farther
upon the edge?
Gallant analyzes P&C stocks for KBW.
CLIFF GALLANT
MANAGING DIRECTOR
KEEFE, BRUYETTE AND WOODS
JANET NAPOLITANO
SECRETARY OF THE U.S. DEPT. OF HOMELAND SECURITY
Ten years after the worst terrorist attacks ever on American soil, America is stronger and more
resilient than ever before. But threats from terrorism persist. And challenges remain.
Over the past decade, we have made great strides to secure our nation against a large
attack or disaster, to protect our critical infrastructure and cyber networks, and to engage
a broader range of Americans in the shared responsibility for security.
Together with our many partners ... DHS has worked to build and strengthen a homeland-security enterprise that mitigates and defends against dynamic threats, minimizes risks, and
maximizes our ability to respond to—and recover from—attacks and disasters of all kinds.
We have made significant progress in: strengthening airline passenger pre-screening;
enhancing screening for explosives; protecting cyber networks and critical physical infrastructure; and bolstering the security of U.S. borders and identification documents.
Together, these efforts have provided a strong foundation to protect communities from
terrorism and other threats, while safeguarding the fundamental rights of all Americans.
Napolitano’s comments were made July 23 in a report outlining HHS’s progress in implementing the recommendations of the 9/11 Commission.
GORDON WOO
CATASTROPHE RISK CONSULTANT
RISK MANAGEMENT SOLUTIONS
The world is becoming politically less stable.
However much a democrat deplores the lack of
individual freedom in a country under dictatorship, the end of autocratic rule generates civic
instability and greater uncertainty over the future,
which equates with more risk. With the prospect
of Internet-enabled mob violence in cities across
the world, insurers need to check on coverage for
riot and civil commotion. From Bangkok to Bahrain,
political activists are increasing the risk of urban-property loss and business interruption. In the
medium-term, the rise of democracy may diminish
the likelihood of major international conflict. But
for the next few years, turbulent times lie ahead.
WILLIAM R. BERKLEY
CHAIR & CEO | W.R. BERKLEY CORP.
The risk of the unforeseen and
the unpredictable has gotten
much bigger.
The most important thing we
learned in 2008 is that independent risks—or risks we thought
were independent—have a much
higher correlation than we expected. Where you thought you could
have a diversified investment portfolio,
everything went to heck all at once.
We have more risk today because there’s
less predictability, more volatility, and larger
swings in volatility in financial markets and in insurance property-loss exposures. A billion-dollar
loss is just not an unbelievable event any longer because concentrations of
values have changed dramatically. We just don’t have
all those small towns and the
spreads we had. Natural disasters, when they hit in a concentrated
area, cost more money.
SEN. DICK DURBIN, D-ILL.
Our weather events are getting worse, catastrophic in fact… The federal government is ignoring the obvious. We need to do
more to protect federal assets and respond to growing demands for disaster
assistance on an increasing frequency.”
Durbin made his comments during a hearing he convened July 28 as
chairman of the Financial Services and
General Government Appropriations
Subcommittee of the Senate Appropriations Committee.
