##ization as well as economic concentration in heavily exposed regions. so with this confluence of factors, the financial burden from natural catastrophes is expected to intensify. “ source : em - dat – the international disaster database ”. “ risk financing is key to building resilience against disasters – study ”, abd, 31 january 2013. “ based on swiss re and aon benfield ’ s estimates ”. bis central bankers ’ speeches minding the protection gap in natural catastrophe risk management 5. going forward, governments can no longer act as the “ insurer of last resort ”. in light of asia ’ s widening protection gap, governments would need to shift away from retaining risks, and transfer a larger proportion of risks to the insurance industry, in order to increase their national resilience against natural disasters. instead of tapping on ex - post disaster risk financing options such as government budgets, public debt issuances and international donations, it is increasingly important for economies in the region to pursue ex - ante risk financing solutions to finance natural catastrophe losses. 6. amongst the various risk financing solutions, insurance in particular, has been found to exert a positive effect in mitigating financial consequences of a natural catastrophe event. a study on the macroeconomic costs of natural catastrophes4 has shown that an increase in insurance penetration by 1 percentage point can lower the cost borne by taxpayers by approximately 22 percent. it has also been found that with adequate insurance coverage, economic activity returned to pre - catastrophe levels long before reconstruction was completed. 7. specifically, insurance can lower the fiscal impact of natural catastrophes on governments in two ways5 : ( i ) firstly, it has a preventative effect by providing price signals, which in turn create incentives for the insured to undertake physical risk prevention measures. this reduces their physical vulnerability to natural hazards, and can help to avoid more costly damages in a loss event. ( ii ) secondly, it has a loss mitigation effect by providing prompt financial relief to support immediate reconstruction efforts, which will help to moderate further indirect losses, such as from business interruption. this reduces the need for private and public borrowing following a natural catastrophe. public and private sectors each has its role to play in increasing insurance penetration 8. the responsibility of ensuring adequate insurance coverage does not reside solely with the governments. individuals and businesses, too, should have vested interests to ensure that their respective exposures to natural catastrophe risks are sufficiently mitigated and insured. 9. however, increasing

management will be an increasing priority for asia. the interconnectedness of natural catastrophe risk management calls for going beyond borders ; and across stakeholders, both government and industry, to coordinate holistic strategies and manage natural catastrophe risks in a sustainable manner. 16. the icrm annual symposium serves as a unique opportunity for various stakeholders to come together to discuss challenges, and chart the course for natural catastrophe risk management in asia going forward. i understand that there is a line - up of interesting presentations covering very pertinent topics such as post - disaster impact analysis “ source : ‘ ifc partners with maipark to provide earthquake - index insurance for indonesian banks ’ ”, can newswire, 1 october 2013. bis central bankers ’ speeches experiences and the types of catastrophe risk transfer and financing solutions, over the next 2 days. 17. on this note, i wish you a productive and memorable time at this symposium and in singapore. thank you. bis central bankers ’ speeches