Financial Management of Large-Scale Catastrophes

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Dramatic events, such as the earthquake that struck China’s Sichuan Province in 2008 and the devastation caused by Hurricane Katrina in the United States in 2005, have brought the financial management of catastrophic risks once again to the forefront of the public policy agenda globally. To address these issues and develop sound policies, the OECD has established an International Network on the Financial Management of Large-Scale Catastrophes. This publication supports the ongoing activities of the Network.

This book contains three reports focusing on different institutional approaches to the financial management of large-scale catastrophes in selected OECD and non-OECD countries, the role of risk mitigation and insurance in reducing the impact of natural disasters, and the importance of strategic leadership in the management of non-conventional crises.



Operational Responses

Between Knowledge and Invention

In the face of a threatening crisis, our intellectual and managerial tradition calls for us to prepare plans. Those plans set out actions and approaches that will be applied at each stage of the crisis. They are fine structures that involve a whole array of responses, in the style of a victory parade where everyone marches in step to an impeccable choreography. Unfortunately, reality rarely fits the plan's assumptions: warning signals are not recognized, managers disappear from the scene, tools do not work. The crisis unfolds on a battlefield fraught with difficulties, and not on a tidy avenue or square prepared for an orderly parade. As the experts continually point out, what matters is not so much the plan as the planning. If we do not heed this, we are bound for failure. This chapter reviews what our grand systems are most sorely lacking in: • An “emergency culture”, an elementary crisis culture: these are known responses, and we must be aware of them. • And henceforth: the capacity to deal with unconventional crises that demand reinvented responses.


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