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New steps of disaster risk management in Mexico: Risk transfer-an strategy to minimise the risk of disasters.

With the expansion of urban centres, the inequality of risk is emphasized, the cost of exposed goods increases, and the impact of disasters acquires greater dimensions. At present, the cost of disasters in the world reaches an average of $ 300,000 million dollars per year, that is, the GDP of Peru and Ecuador, together according to the United Nations Office for Disaster Risk Reduction (UNISDR). The human and economic losses that result from a disaster compromise not only public and private goods, but also impose important regressions on the development of entire communities or countries.

 

Countries with high exposure to natural phenomena, low insurance penetration and public deficits, such as Mexico, face significant funding gaps and even put their tax systems at risk in the context of a disaster. For countries without reaction capacity, the impacts of a disaster can mean a regression in their development of decades.

 

In the context of insurance, the State must act as an insurer of last resort on extraordinary losses and / or unsecured risks that exceed the capabilities of the private sector. In this sense, the greatest work of the state falls in the field of management and risk reduction, which implies: the design and control of land management and construction codes; ensure the provision of critical infrastructure services, the development of emergency plans that define the precise responsibilities and the coordination of the authorities involved; as well as guarantee financial regulation for private insurance.

 

Mexico has built one of the most important financial systems of disaster risk management in the world. With the creation of the National Disaster Fund (FONDEN), Mexico has laid the groundwork for venturing into the creation of financial vehicles to respond to disasters, and risk transfer mechanisms, which have made the country an example to others developing countries facing similar problems.

 

Although it is necessary to reduce the risks before transferring them, the acquisition of this type of scheme is a shared responsibility not only between the insurance company and the insured, but also from civil society and the authorities who should promote the insurance culture, promote the use of mandatory coverage, as well as transparent handling and payment of claims. To achieve this, we must invest in a consistent way in the development of science and study of the threats and vulnerabilities in Mexico. And in this, both the government and the private sector play fundamental roles.

 

From events as last year’s earthquakes, it is relevant to explore and discuss about strategic-prospective risk management, resilience, financial disaster risk management and other strategies to face the consequences of natural events.

 

The panel will address the lessons learned and the challenges that the country still has.

Written by Sandra Camacho Otero, Chevening Alumna.