By STEVE TUCKEY, who has written on insurance issues for a decade for several national media outlets
Would a high-level government position along the lines of a "country risk officer" helped to avert crises ranging from the financial meltdown of 2008 to the near-tragic Christmas Day suicide-bombing attempt last year?
As chief U.S. economist for Swiss Re, Kurt Karl helped develop the Global Risks 2010 annual report, sponsored by the World Economic Forum (WEF), that has called for the creation of just such a government entity.
A country risk officer would have the power to coordinate efforts dealing not just with financial risk, but also natural disasters such as the earthquake that struck Haiti last month. "We don't really have a system set up whereby chief risk officers for countries could coordinate FEMA-like responses to events like what is going on in Haiti now," Karl told Risk & Insurance®.
Karl, who is based in New York, was reluctant to detail how such a new government post would fit into any particular government structure, be it parliamentary, such as in England or Germany; presidential as in the United States; or a combination of both as is the case in France.
"Most countries have all of this," he said. "It is just not centered in one office or position."
The Global Risks report is published in partnership with the WEF and Citigroup, The Marsh McLennan Cos., Swiss Re and Zurich Financial Services to coincide with the WEF's annual meeting held in Davos-Klosters in the Swiss Alps each year.
Many large global corporations today have established the position of "chief risk officer" that Karl said could serve as prototype for such as post.
The report also noted that the greater interconnections between risks today have translated into a higher level of systemic risk than ever before. It also points out that sudden shocks, such as a terror attack or even the 2008 financial meltdown, have to be taken into consideration with what it terms "slow failures or creeping risks."
"Because these failures and risks emerge over a long period of time, their potentially enormous impact and long-term implications can be vastly underestimated," the report stated.
If the "country risk officer" concept takes hold in enough countries it could go a long way in closing what the report terms the "global governance gaps."
Howard Kunreuther, co-director of Wharton School Risk Center, said the report underscores that "while there is tendency to think just in the short term, what is needed now are long-term strategies and thinking."
February 1, 2010
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