Castellano, Giuliano G. --- "Rising from the Ashes: A Governance Perspective on Emerging Systemic Risks" [2011] ELECD 924; in Alemanno, Alberto (ed), "Governing Disasters" (Edward Elgar Publishing, 2011)

Book Title: Governing Disasters

Editor(s): Alemanno, Alberto

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9780857935724

Section: Chapter 16

Section Title: Rising from the Ashes: A Governance Perspective on Emerging Systemic Risks

Author(s): Castellano, Giuliano G.

Number of pages: 17

Extract:

16. Rising from the ashes: a
governance perspective on
emerging systemic risks
Giuliano G. Castellano

16.1 INTRODUCTION
Unpredictable events ­ like an infrastructure failure such as a blackout (e.g.
the 1999 southern Brazil blackout or the northeast blackout of 2003 that
occurred in the US and Canada), a large-scale financial crisis with deep
consequences on the real economy (e.g. the Icelandic and the Greek crises),
a non-conventional terrorist attack (committed with chemical, biological,
radiological, nuclear weapons), the risk related to the exploitation of new
technologies (typically nanotechnologies), or a geophysical event (as the
2010 volcanic ash crisis or the 2011 Japan earthquake) ­ may suddenly
cause large-scale losses. The knock-on effect of these events grows beyond
the direct social and economic impact on a specific geographic area,
affecting simultaneously different regions and imposing immediate regula-
tory answers.
The chapter addresses those risks here defined as `emerging', since they
lack previous records but are expected to increase in frequency and impact.
The main feature of this `line of risk' ­ to use the insurers' terminology ­ is
the lack of sufficient knowledge. By showing that this feature also charac-
terizes the 2010 volcanic ash crisis ­ which may be considered an unex-
pected infrastructure failure ­ this chapter attempts to identify the core
policy issues to be addressed through a risk-based governance model that
stimulates preventive strategies and minimizes losses. Such an approach
requires both public actions and private sector's interventions (typically the
insurance and reinsurance industries) to ...