So says the first line of
this article from the Financial pages, 06 Jan 05. The article discusses the financial situation resulting from the tsunami disaster in the Indian Ocean. The author seems to be lamenting the fact that although the tsunami's impact on humanity is unfathomable, its impact on the financial world is not as great. Lament is not quite the right word. He seems to be trying to write through the idea that he is perplexed by the fact that despite the enormity of the situation, the financial repercussions will be on a smaller scale. This makes sense when he describes the way insurance works - risk distribution and behavior prediction in a collective.
He states that there was little insurance business in the area, so little payout when there is a catastophe such as this. He claims that catastrophe cannot be predicted. Insurers don't want to make wide-open bets, as they would have to when considering some of the long-term prediction involved with weather systems and geological events. And this is when he brings up the whole "Act of God" situation. The "heartless" factor comes in when he mentions that those insurers who will deal in catastrophe coverage and the like get their few customers to pay higher rates; I assume this is out of fear inspired pitch. They would have to get higher rates, because the small number of people who want catastrophe insurance is so small. If the rates weren't high, it wouldn't be worth the trouble (in terms of returns, not humanity). The author writes,
"Where insurers see trouble, the insured often choose to see blue skies. Oddly,
customers (that is, most of us) tend to underestimate the potential harm from
catastrophes, largely because we don't think clearly about 'extreme events' -
events that are improbable but costly. If an event is very unlikely, people
treat it as if it were impossible, especially when the time horizon is long.
Give people complicated options involving serious consequences, and they often
prefer not to make any decision at all: fatalism by default."
And heres where he fails his readers. This is a fantastic analysis of the situation, but he passes over it with two short ending paragraphs about local situations, input of financial markets, and disaster as a product.
He comments on Richard Posner's book _Catastrophe: Risk and Response_. I've read some of Posner's work before, and its a valuable addition to risk analysis literature. His prescription (more effort to preparing for catastrophe), as the author of the article puts it is "reasonable", but then completely discounts it with his "poetic stylings".
"...while it may be expensive to prepare for rare events with dire consequences
- a tsunami, an earth-bound asteroid - it is the reasonable thing to do. But
catastrophes wouldn't be catastrophes if there was anything reasonable about
them."
All he has done with this statement, and quite successfully, is turn a curious and maybe even motivated reader into a skeptic completely vulnerable to the acts of god that we cannot control or predict. This defeats what I saw as the entire purpose of the article - to show that there is some financial and logical value to predicting and protecting against catastrophe. Its not as unpredictable as we may believe. The author even says himself, "If an event is very unlikely, people treat it as if it were impossible..." Yes, they treat it as if it were impossible, but this begs the question, is it really impossible? I'll be some seismologists, geologists and meterologists would argue that it isn't.
This is a problem of patience and respect for/understanding of history. We have reduced all of our intake to bite size pieces to such a large extent that we can't think realistically beyond our 4-year administration, or 5-year career trajectory, and more often we can barely make it through the epic 3 hour movie that has become such a popular format for directors, or the 30 minute sitcom that thankfully has a commercial break after the first 5 minutes. I'm sure it would boggle minds to be told that SCOTUS judges are appointed for life. Until we start listening to the people who try to warn us - the people with the labs and their eye on data - we won't ever be financially or structurally prepared for catastrophe. Forget a global warning system, public signs, evacuation routes and local education workshops might have been helpful.
And theres also a typo about three quarters of the way through. The illustration is the work of Seymour Chwast.