The disaster risk management industry is worth US$800 million globally, but Asia Pacific accounts for only a tenth of it.

Experts said new risk management techniques, which make use of modelling and analytics software, can better quantify these costs, and ensure that governments and insurers shoulder a bigger proportion of rebuilding costs.

This is especially relevant to Asia, where significant insurance gaps still exist.

Global economic losses from natural disasters hit a record high of US$380 billion last year.

Asia accounted for 70 per cent of these losses, or US$266 billion. But only 40 per cent of the losses, or US$105 billion, were covered by insurance.

Roman Hohl, CEO of the Asia Risk Centre, said: "Often, the cost of disasters has to be borne by the large population, essentially the ones that cannot afford insurance, or the ones that have no access to insurance.

"In Asia, a lot of commercial and industrial risks are usually insured. These come in the form of engineering projects, hotels and shopping malls, but the city dweller in Asia's mega cities often has no insurance available."

Experts have come up with new methods to quantify costs related to natural disasters.

Disaster risk management is a field of study integrating science, engineering and finance.

It aims to quantify and mitigate damage costs arising from catastrophic events, such as pandemics, terrorist attacks and earthquakes.

This means the reconstruction burden can be better managed, with the private sector bearing more costs, for example, through insurance-linked securities or catastrophic bonds.

Professor Pan Tso-Chien, executive director of the Institute of Catastrophic Risk Management, said: "There is a better understanding in the government in terms of emergency response, there is a better arrangement of how the financial industry can be tapped to co-share the load after the earthquake has happened, with less money coming from the victims."

Asia Risk Centre creates risk models to quantify the cost of disaster events.

This information can then help governments and insurance companies develop insurance programmes for Asia's two billion people.

So when a disaster strikes, the accumulated insurance premiums can be used to pay for the losses of those who are most badly affected.

These residential programmes are already compulsory in some European and North American cities.

channelnewsasia.com