Robert Kast : CNRS, LAMETA Montpellier, IDEP Marseille and IFP Pondicherry

Introduction

 

The first time one talked about insuring seismic risk, it seemed like an earthquake in the world of Finance and Insurance! However, Swis-Re, the world's biggest reinsurance company, and a firm that has managed financial instruments as well as insurance contracts for over a century, confronted the problem and recently arrived at practical solutions, notably for Mexico and the Mediterranean area.

 

I'll introduce the type of financial contracts proposed in the last section, but first I'll go over the history of risks management, then differences between collective and private approaches in front of risks, before I review different forms of management policies and instruments.

1. Risk management over history: Fighting the four enemies

Let me indulge in my old 68's culture to structure this first analysis on a then classical reference: The way of the pacific warrior by Carlos Castaneda, a strange teaching given to him by an old Mexican Indian sorcerer and related by the author as his Ph.D. thesis at the beginning of the 70's. There are four enemies that an ordinary man has to face and overcome in order to become a warrior (i.e. one pretending to become a proper human being and not just a particular animal).

The first one is fear, the second one is clarity (enlightenment, knowledge), the third one is power (wisdom) and the last one, the one that one can't completely vanquish, is old age, or the evidence of death. I think these four steps may help us to understand how risk has been approached during human history, as well as in each of our individual lives.

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