Learning from catastrophes

Breakthrough Best Practices for Managing Extreme RisksBoth Natural and Man-Made

• How to prepare for risks ranging from financial crises and climate change to pandemics and terrorism
• Indispensable information for leaders and strategists in business, the public sector, and nonprofit organizations alike
• Draws on leading-edge research from The Wharton School and top risk management experts worldwide

Hurricanes. Earthquakes. Pandemics. Global economic crises. Terrorism. Whether natural or man-made, massive catastrophes happen far more often than decision-makers once imagined. Organizations must prepare for these eventsbut how?

In Learning from Catastrophes, the world's leading experts in extreme risk management present innovative approaches to mitigation, preparedness, and response. They show how to dramatically improve forecasting and communication about high-consequence risks, use economic incentives to improve resilience and sustainability, and proactively implement operational steps for rapid, effective response to disaster.

In today's increasingly unstable, uncertain world, preparing for extreme risk has never been more urgent. Whether you're a leader in the private, public, or nonprofit sector, this book presents the principles and strategies you'll need.

Foreword by Klaus Schwab xiii

Preface by Howard Kunreuther and Michael Useem xv

Part I: Setting the Stage

Chapter 1: Principles and Challenges for Reducing Risks from Disasters 1

Howard Kunreuther and Michael Useem

Chapter 2: Acting in Time Against Disasters: A Comprehensive Risk Management Framework 18

Herman B. 'Dutch' Leonard and Arnold M. Howitt

Part II: Linking Risk Assessment, Risk Perception, and Risk Management

Chapter 3: Forecasting and Communicating the Risk of Extreme Weather Events 41

Geoff Love and Michel Jarraud

Chapter 4: Cognitive Constraints and Behavioral Bias 64

Séan Cleary

Chapter 5: The Five Neglects: Risks Gone Amiss 83

Alan Berger, Case Brown, Carolyn Kousky, and Richard Zeckhauser

Chapter 6: Can Poor Countries Afford to Prepare for Low-Probability Risks? 100

Michele McNabb and Kristine Pearson

Chapter 7: The Role of Risk Regulation in Mitigating Natural Disasters 121

Bridget M. Hutter

Chapter 8: Hedging Against Tomorrow's Catastrophes: Sustainable Financial Solutions to Help Protect Against Extreme Events 139

Erwann O. Michel-Kerjan

Part III: Applications to Catastrophic Risks

Chapter 9: A Financial Malignancy 156

Suzanne Nora Johnson

Chapter 10: Climate Change: Nature and Action 170

Thomas E. Lovejoy

Chapter 11: Lessons from Risk Analysis: Terrorism, Natural Disasters, and Technological Accidents 177

Detlof Von Winterfeldt

Chapter 12: Turning Danger to Opportunities: Reconstructing China's National System for Emergency Management After 2003 190

Lan Xue and Kaibin Zhong

Chapter 13: Dealing with Pandemics: Global Security, Risk Analysis, and Science Policy 211

Jiah-Shin Teh and Harvey Rubin

Part IV: Innovation and Leadership

Chapter 14: Long-Term Contracts for Reducing Losses from Future Catastrophes 235

Howard Kunreuther

Chapter 15: Developing Leadership to Avert and Mitigate Disasters 249

Michael Useem

Endnotes 269

About the Authors 307

World Economic Forum Global Agenda Council on the Mitigation of Natural Disasters 313

Index 317