The benefit of resilience building 21 December 2016 David Nash Z Zurich Foundation

Agenda Why we chose to work with community flood resilience How our program works What we have achieved so far Motivation - why should an insurer (in fact any business) care about resilience building Q&A

Why choose Community Flood Resilience Why Floods: The humanitarian and physical losses from flood, in any year, are more than the losses from all other natural hazards combined Floods are a global issue affecting almost every country Why Communities: Every community is different and experiences flood differently, so solutions will necessarily be different for each one Why Resilience As an insurer we believe that pre-event action to build resilience to a hazard is more effective than post-event Yet 87% of all disaster-related funding is targeted at relief and recovery after an event Zurich’s risk understanding expertise can be used to shift this equation

Theory of Change Our aim is that communities become more resilient in the face of floods. Resilience is defined as the ability of a community to pursue its social, ecological and economic development and growth objectives, while managing its flood risk over time, in a mutually reinforcing way. This means that a greater proportion of disaster-related funding from all sources is directed to pre-event resilience building This requires that stakeholders have the capacity: To know how to engage in resilience building with communities AND To be willing to redirect or prioritise resources towards this To do that, they will need good knowledge about the benefits of taking action and practical evidence of what works Our community program Tests resilience building activities and develops knowledge on what works AND Invests in research, specifically to support development of solutions and to understand the benefits

A cross-sector Alliance Knowledge for action Research and modeling Influence Scientific credibility Case studies Methodologies & tools Catalyze Risk engineering Financial resources Influence and advocacy Global Reach Technical Innovation Community presence Scale and reach Influence and advocacy Small and agile Innovation and ideas piloting Solutions catalogue Innovation & Technical Advice

What are achievements so far? At the Community level: Bangladesh, Indonesia, Mexico, Nepal and Peru: Among the most flood exposed countries in the world. We can transfer insights from these communities, both to the developed and the developing world In Indonesia: Early Warning System with real-time flood warning implemented. Information access through website and SMS. Link to government authorities. Fully endorsed by the government disaster management agency. It benefits 17 million people. Assessing and measuring flood risk is key to identify the right solutions. Currently no validated approach to measure what makes a community resilient. We created our own Flood Resilience Measurement Tool now being tested in 8 different countries including the US. At the Community level: We work in Bangladesh, Indonesia, Mexico, Nepal and Peru as they are among the most flood exposed countries in the world. We believe that we can transfer insights from working in these communities to other places, both in the developed and the developing world. In Indonesia, we have implemented an Early Warning System that provides real time flood warning with an hourly prediction. It can also provide rain fall/flood prediction for next 5 years. Information is accessed through a website and SMS. The system is linked with government river authority, ministry of information and communications and is fully endorsed by the government disaster management agency. It currently benefits 17 million people. Assessing and measuring flood risk is key to identify the right solutions but as part of our work we discovered that there is no validated approach to measure what makes a community resilient to floods so we created our own Flood Resilience Measurement Tool (see appendix for methodology). The tools is now being tested in 8 different countries including the US.

What are achievements so far? At a Research level: IIASA and Wharton provide new insights into flood risk management and test hypothesis that risk reduction is better than relief and recovery. Review of cost-benefit studies: every dollar spent on risk reduction measures saves 5 dollars through avoided and reduced losses. Insights why people do not protect themselves from flood risk even if protection measures are available: People have a false sense of security. They may overestimate the likelihood of a flood, but underestimate the losses. Zurich-developed forensic post-event review methodology (PERC) that analyzes large flood events. 9 major floods reviewed. Findings are cross-cutting, irrespective of their geographical or development context. We use the insights gathered through research and PERC to improve services to our customers and our in-house expertise in RE and UWR through trainings, workshops and communication. At a Research level: The research partnership with IIASA and Wharton provides new insights into flood risk management but also tests our hypothesis that risk reduction is better than relief and recovery Through a review of a large number of cost-benefit studies, IIASA has proven that for every dollar spent on selected flood risk reduction measures, an average of five dollars is saved through avoided and reduced losses. Wharton has provided insights into why people do not protect themselves from flood risk even if protection measures are available. If government funds are always made available after a disaster, it leads people to have a false sense of security. They also often overestimate the likelihood of a flood, but underestimate the losses they will face if a flood affects them. We have developed a forensic post-event review methodology (PERC) that analyzes large flood events after the fact to understand what works and what does not and which patterns emerge. We have conducted studies of 9 major floods during the past three years and findings are very similar, irrespective of their geographical or development context. We use the insights gathered through research and PERC to improve services to our customers and our in-house expertise in RE and UWR through trainings, workshops and documentation.

What are some achievements so far? At a Public Policy Level: We support national, regional and global public policy discussions on flood risk and resilience. We want to improve national flood insurance arrangements longer term. In 2016, co-organized a Forum on the Financial Management of Flood Risks with OECD. The forum gathered over 100 regulators, insurers and academics, and positioned Zurich as the go-to insurer for insights on flood risk and resilience. In 2015, North America CEO participated in a White House meeting on climate resilience and extreme weather events. He presented our approach to measuring resilience which led to further meetings regarding the role the insurance sector can play. We are engaging with the European Commission (EC) Working Group on Climate Action (DG CLIMA), with the EC Working Group on Floods and the Rhine Commission At a Country Level: Flood resilience is a focus topic for Zurich Switzerland. In 2015, they launched a Natural Hazards Radar which is a publicly available tool for a property flood hazard and risk assessment in Switzerland including a set of recommendations how to manage risks.

Collaboration Success Development of a framework to understand what provides resilience to floods at a community level Based around the idea that the way in which a community builds, uses and maintains its assets (the 5 capitals of the sustainable livelihoods framework) creates aspects of resilience Creation of a measurement tool to measure changes in these capitals over time Testing across communities in 8 countries to provide evidence that building capitals results in better resilience outcomes Providing analysis of community data to help with solution finding

What motivates Zurich’s involvement? Challenge for any business is relevance to community Insurance is a risk-transfer tool, but only effective at the tail end In many places, insurance is simply not a priority spend By building resilience, communities manage risk and build prosperity This creates relevance for insurance and opens new markets

Thank you zurich.com