Risk Governance

The Risk Governance research section was established in 2012 to deal with the major legal, economic, institutional and policy issues characterizing the management of large-scale risks and emerging risks both at the domestic and international level. The research fields in which this section specializes range from the regulation of risk sources and prevention measures, to the allocation of institutional competences in public governance systems and the financial coverage of the costs of catastrophes by means of insurance, reinsurance and alternative risk transfer and financing tools, including capital market instruments. Recent major catastrophes clearly demonstrate that extreme events pose serious social and economic challenges not only to emerging economies, but to developed and industrialized countries as well. From the standpoint of governments, it shall be noted that the economic and financial impact of extreme natural events and man-made disasters on private businesses and individuals can be significant, which in turn may cause large welfare losses, decreasing tax revenues and broad macroeconomic consequences, with cascading effects and systemic risk potentials. Moreover, public budgets may be directly affected by the destruction, impairment or loss of use of public assets exposed to risk, including buildings and infrastructures. In the aftermath of a catastrophe, furthermore, experience shows that public authorities are under strong political pressure, or sometimes even under a legal duty, to provide assistance and compensation to injured parties. Planning ahead for the financial coverage of future disaster costs is, therefore, a necessary component of sound catastrophe risk management strategies in both emerging and developed economies worldwide. Public-private co-operation in this field of crucial importance to introduce appropriate incentive mechanisms anchored in an integrated framework of risk assessment, risk awareness and risk reduction. In this perspective, the Risk Governance research section examines, from a comparative law and economics standpoint, the legal tools and the institutional arrangements that are aimed at increasing the physical and financial resilience of the economy and the society with respect to extreme events. Among the various legal tools, special attention is devoted to insurance and reinsurance contracts, but also to risk reduction and mitigation measures, compensation funds, as well as other fiscal and regulatory measures that can be adopted to facilitate the financing and transfer of catastrophic risks, including by means of disaster risk securitization transactions. As for institutional arrangements, the analysis focuses on the different ways for the public and private sectors to interact and join their respective efforts in response to extreme risks, including various forms of public- private partnerships (PPP).

Different roles of the public authority
Backstop liquidity provider
  • United Kingdom (Pool Re)
  • Australia (Australian Reinsurance Pool Corporation - ARPC)
  • Belgium (Caisse nationale des calamites + partecipazione nel Terrorism)
Reinsurance and Insurance Pool
  • France (Caisse Centrale de Réassurance - CCR)
  • Japan (Japan Earthquake Reinsurance Co., Ltd. - JER)
  • Germany (participation in Extremus AG)
  • United States of America (participation in the Terrorism Risk Insurance Program)
  • Taiwan (participation in the Taiwan Residential Earthquake Insurance Pool)
Direct insurer
  • Iceland (Iceland Catastrophe Insurance - ICI)
  • New Zealand (Earthquake Commission - EQC)
  • Spain (Consorcio de Compensacion de Seguros)
  • United States of America (California Earthquake Authority, National Flood Insurance Program)
  • Australia (Australian Reinsurance Pool Corporation - ARPC)
  • France (Caisse Centrale de Réassurance - CCR)
  • New Zealand (Earthquake Commission - EQC)
  • Spain (Consorcio de Compensacion de Seguros)
  • Turkey (Turkish Catastrophe Insurance Pool - TCIP)
  • United States of America (National Flood Insurance Program)
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