of the european securitisation framework could also provide insurers with new solutions for diversifying their strategic asset allocation. there is much more at stake here page 3 of 9 than technical discussions over prudential ratios – it is a matter of strategic importance for europe. the development of equity financing is essential if europe is to catch up in terms of innovation. our continent has the resources – private savings ; it also has the needs – investment in the transformations of the european economy. but, unlike the united states, it does not have sufficient financial intermediation between the two. this is precisely the goal of a genuine savings and investments union, as recommended by the draghi and letta reports. and this union is not just aimed at banks, markets, private equity funds or venture capital funds. it needs to rely on you, insurers, as well. ii. an increasing role in the future 1 ) the transformations under way in our society in a world that is changing more rapidly, new risks are emerging. to what extent can they be covered by insurers, or to what extent are they in fact “ insurable ”? i ’ m going to focus here on three challenges. first, the challenge linked to the digital transformation, which has been accelerated by the pandemic. although this transformation is indeed generating opportunities and efficiency gains, it is also making information and operational systems increasingly complex – notably due to fragmentation linked to the growing use of external service providers – and increasingly exposed to sophisticated cyber attacks. the insurance industry needs to maintain greater vigilance over these risks to guarantee its own resilience. the imminent entry into force of the dora regulation is contributing to this. more generally, it is crucial that all firms and citizens can protect themselves against these heightened it / cyber risks. here again, the insurance industry has a predominant role to play, through initiatives to raise awareness, but also by developing cyber insurance. the second very concrete transformation facing the insurance industry is climate change. the biggest direct consequence is an intensification of the physical risks, which translates as a rise in the frequency and cost of insured climate events : we ’ ve just witnessed this dramatically in mayotte. according to swiss re, natural disasters generated total economic losses of eur 295 billion page 4 of 9 in 2024, an increase of 6 % compared with 2023. i and in the latest edition of its climate scenarios, published in november, the ngfs ii – our network for

suggests that they could engage in almost infinite leverage in their off - balance sheet transactions if they so chose. one has to ask whether the basle capital requirements are excessively generous in their treatment of financial market activities. a related problem is the weakness in banks ’ credit assessment processes that allowed them to build up some very large exposures to hedge funds and other financial institutions. no matter how effective the above changes turn out to be, no - one expects that they will eliminate economic crises altogether. there still will be a need for improved crisis management. here, the most useful suggestion goes under the title of private sector burden sharing. this is designed to be used in a future crisis when a country ’ s international reserves are exhausted and its exchange rate is plunging as a result of capital flight. in order to reassure markets, countries are often tempted to guarantee a variety of foreign borrowings, with the result that their taxpayers incur large losses while foreign lenders escape unscathed. private sector burden sharing would stop the capital flight by bringing foreign creditors, the debtor country and the imf together to work out a rescheduling, probably with a standfast arrangement to hold things together while negotiations take place. thus, the burden would be shared more evenly, and the pressures on exchange rates could be reduced. another way in which crises can be handled better is illustrated by the recent imf package for brazil. it was an improvement on the asian packages in two respects. first, the conditions were agreed on in advance in behind - the - scenes negotiations between the imf and brazilian authorities. this was much better than the public tug - of - war between national authorities and the imf that occurred in thailand and indonesia. second, i also note that the conditions are not as wide - ranging as in indonesia, for instance. i agree with martin feldstein2 that the imf conditions should confine themselves to matters that bear directly on the currency crisis, namely fiscal, monetary and banking policy, rather than trying to reform the automobile, shipbuilding or clove industry, as in indonesia. 4. conclusion it is important that we find a way of reducing the present extreme variability in international capital flows. it is also important that we find a way of managing future crises in a way that reduces the cost to the crisis country and shares the burden more evenly, and so reduces the moral hazard to lenders. if we do not succeed in doing these things, we face the prospect of a significant number of