1. Rebooting Humanity -The Role of Insurance and the Financial
Sector
A Special address by Prof. Yehuda Kahane
On the occasion of signing the Principles for Sustainable
Insurance (PSI) Treaty by the World insurance industry leaders
and the heads of United Nations Environmental Protection
Agency (UNEP)
It was presented at the International Insurance Society Annual
meetings in Rio De Janeiro June 2012, In parallel to the UN
Summit on the Environment and climate- in Rio De Janeiro June
2012.

2. Risk Management:
Social, Economic, Ecological
Yehuda Kahane, PhD
Dept for Business & Environment
Tel Aviv University
1. Introduction
Hello and welcome! As an IIS veteran I specially cherish the invitation and the privilege to be here
with you today at the kick-off of the 2012 International Insurance Society Conference, and the
signing of the Principles for Sustainable Insurance (PSI) Convention. It is an historical moment for
the insurance industry and for the World.
We have a few moments to speak about the most critical Social, Economic & Environmental risks
we face today (What we call SEE). As risk managers, this is our area of expertise. I believe that the
insurance industry must lead the world to a sober path of sustainability on this beautiful planet that
we share.
The place where I stand today, and where I invite you to stand with me, is that we are at a critical
choice-point for the well-being of our planet. This choice point is not a “nice thing to do” . It is
rather a ringing of the FIRE ALARM . Quite literally, our “global house” is on fire.

3. Give me a Place to Stand
& I can Move the Earth Archimedes
2. ARCIMEDES
During my long and happy career in the insurance industry, I have often used insurance instruments
as leverage for handling challenges in what seemed to be unrelated topics.
A quick example is when a very small group of us, all insurance experts, collaborated on establishing
agricultural insurance plans for Latin America. The policies served as collaterals for private loans to
the farmers. This fulfilled the missing link, connecting advanced technologies with the needed
financing, and made the US AID program successful. It generated a remarkable increase in the
agricultural output of the entire continent at the beginning of the 1980s.
The PSI Treaty is capable of using even a much stronger leverage in an attempt to handle the SSEE
challenge.
As you can see from the top of each slide, we shall talk about “Reboot”. It is a critical thinking
technology. My colleagues and I have developed it in order to move us forward into a quantum leap
of solving our shared, global problems. We sometimes need unconventional approaches and a fresh
look at things in order to reach novel solutions for the issues that vex us.

4. Paradigm Shift
3. EARTH RISE
President Kennedy’s 1961 stand that the USA will send a man to the moon by the end of the
decade, triggered the greatest paradigm shift of our age. It was the first time, in 1969 – only 4 short
decades ago – that we first saw “earth rise” on the moon. It was the first time ever we “saw
ourselves” as one little planet in the middle of nowhere.
In that moment, thousands of possibilities that we had never before seen, opened up on the road in
front of us. And in the following four decades we have seen advance after advance that have
connected us together.
This is the post-industrial technological revolution that reshaped the world.
We are now connected through via satellites to a web of knowledge and conversations. We have
the internet, mobile phones, computers, Facebook, TED Talks, YouTube and Wikipedia! What an
extraordinary world we live in!

5. Exponential Growth
When Doubling Doubles
The famous “hockey stick” graph – constant,
long term rate of change that creates dramatic
level of change in the last stages of the
process:
EXPONENTIAL MODELS
The Industrial and Post-Industrial revolutions, for the first time triggered and accelerated the
change processes on our planet. Many of these processes are exponential.
An exponential process means roughly constant rate of change. t takes a while before it becomes
noticeable. But at a mature stage the absolute level of change “snowballs” and may become
dramatic
Over time, an exponential growth or decline process resembles the shape of the “Hockey Stick”.
This effect is made clear by the example of fast growing bacteria in a Petri dish. The first doublings
are no problem because the dish can accommodate much more than this. However: just before the
final doubling – the one that will hit “full” capacity – the dish is only half full, and 3 doublings earlier,
it was only 7% full.
Let’s look at exponential process in the SEE framework:

6. Social
5. POPULATION
Let's talk about something you all know: Global Population trends.
For millenniums, our population and its growth were very small.
Around 1800, world population has crossed the 1 billion level.
In 1900, only one hundred years later, we already had 1.6 Billion.
And a hundred years after that, we hit 6.1 Billion. That is the Hockey stick.
In the last century the net change was 4.5 Billion people!
Until recently, one of our leading paradigms was that our “Petri dish” was sparsely inhabited, LARGE
and EMPTY, PLENTIFUL and seemingly endless. And then … boom, exponential growth became
explicit in our lives.
Suddenly, our planet, is almost full.
In a crowded environment, mutual INTER-dependency among people is complex and great. And to
govern such a crowded place, with all the inherent pressures, and still be attentive to the various
individual and social needs and desires, requires a new kind of democracy – one that will make use
the modern means of connection and communication.

7. Economic
6/ECONOMICS
In the Economic arena we are also surrounded by many hockey stick models:
Think about growing consumption. about urbanization, about the use of energy , to name a few.
In 2007, for the first time, global statistics showed that more than half of us lived in urban areas.
Our giant mega cities make city-dwellers the most vulnerable of species. They must buy and
transport almost everything they consume.
For example, we are vulnerable to our energy needs; imagine there being no electricity for an entire
day here in Rio or in the city where you live – now stretch that to living without electricity for an
entire week : No food, water, transportation, communication, refrigeration, computers, internet- a
real catastrophe. Not pretty!
We are depleting all our resources at a tremendous rate. We burn oil like there is no tomorrow. 200
years ago, most people didn’t have oil, and didn’t know what to do with it, except for using it to
grease their wagon wheels. (in ancient time tar was used to mummify corpses.).
Within the short span of 150 years, we’re close to depleting all of Earth’s oil reserves.

8. Environmental
7. ENVIRONMENTAL
We see similar hockey sticks (rising and declining) in the environmental arena:
Glaciers are melting, fresh water is disappearing and getting polluted. Air pollution. Waste
accumulation. Arable land is washed away because of deforestation and poor care of top soil.
In the past 4 decades we’ve destroyed 80% of all ocean fisheries. We’ve destroyed 30% of all plant
and animal species, and substantially damaged delicate food chains, and the entire eco-system.
Micro-organisms in the oceans that supply half the Earth’s oxygen, are in critical danger.

9. A Perfect Storm
8. PERFECT STORM
With the combination of all these processes, we are nearing to a "perfect storm". We are
reaching the Petri Dish limits and if we don’t do anything … well, you do the math. It’s pretty
simple.
The harshest of all the truths is that regardless of what we humans do to the planet, Earth will
survive. We, on the other hand, may get booted out from the game by Mother Earth. we are
playing the game of our lives!
Do you hear any alarms ringing?
Somebody may find our remains in an archaeological dig many centuries from now and wonder:
“What were they thinking?”
“Didn’t they realize they were doing this to themselves?”
“I hope we are not that short-sighted.”
We shall see . .
While our economies grew and our material environment has flourished, we didn’t pay attention
and neglected our ecosystem and the environment. We can’t live without it. Try living for a week
without water or food...
We must find ways to decouple economic growth from environmental damages. It is possible to be
a rich and clean country. A Poor country becoming a rich country, doesn't have to go through a rich
and dirty stage! It should go directly to the rich and clean stage!

10. Environmental Challenges =
Great Economic Challenges
• Destruction of the Essential Ecosystem
• Global Climate Change
• Loss of Biodiversity
“Humans are the most dangerous animal in
the zoo.” Yann Martel
9. ENVIROMENTAL= ECONOMIC CHALLENGE
Global climate change is a serious economic issue. It is estimated that it annually costs between 5-
20% of the global GDP. Still, it is not the most important environmental issue!
The loss of the ecosystem is an even grander and more serious problem.
And the rapid loss of biodiversity means lost flexibility and resilience. It is probably the greatest of
all. So critical is biodiversity, that the United Nations declared 2011 to 2020 the Decade of
Diversity.
A less diversified environment is equivalent to holding an undiversified financial portfolio. But
when we talk about the effects on a global level – this has an awesome, negative impact!
For example: Most of the world’s production of the major crops comes from just a small number of
varieties (in comparison to the tens of thousands varieties that were grown until just a few decades
ago). it is just a matter of time until certain virus, fungi or bacteria, that feed mainly on these
varieties, will develop. A realization of such risks can be demonstrated with the case of the Irish
Potato Blight of 1846. Reliance on just two potato varieties, both vulnerable to the blight, resulted
in the deaths of one million people and emigration of another million from Ireland.

11. Can’t We Just Borrow?
10. 5 PLANETS
In order to treat these problems, we must urgently shift the paradigm of how we see ourselves.
What’s the sense of doing business if we are destroying our environment? We have to change the
ways we do business! We have to find ways to stop the destruction and reverse the damage of
these trends.
Research shows that the average persons living in the developed world use ecosystem services that
are 3-5 times larger than their share in the available bio-capacity.
There are five earths on this slide. If every person on earth lived at the same style, we would need
3-5 earths to sustain us.
But alas, unlike a family that can finance temporarily living beyond its means, by borrowing or
selling some assets, that cannot be done at a global level. Unfortunately we know no nearby planet
that can offer help...
What does the Invisible Hand do Now?
11. INVISIBLE HAND
The invisible hand that guides our capitalistic systems was supposed to automatically reach an
overall optimization of allocation of resources in the economy.
In a global economy, what will that Invisible Hand guide us to do next?
Look at the options on this slide. In which direction do you hope the Invisible Hand moves us?

12. How We Got Here Doesn’t Matter
12. ELEPHANT
Although there are many places we can point our fingers to place blame in the right places and into
the right markets, the truth is that it no longer matters how we got here.
All that matters is that we get out!
It is an old (I believe it is Chinese) proverb that says that “The best time to plant a tree is 20 years
ago, and the second best time to plant a tree is today.”
Many actions we could have, should have taken twenty years ago. But how we got here and what
we did or didn’t do, no longer matters, except as lessons for the future.

13. Capitalism
• Narrow View (Cradle to Grave)
Land, Capital, Labor
• Broad View (Cradle to Cradle)
Land, Capital, Labor
+ Information + Technology
+ Renewable Resources + Preservation
13. CAPITALISM
What we are dealing with today are the results of Narrow Capitalism.
We have to extend our view to Broad Capitalism.
The simple, narrow formula is the one we all know: Land + Capital + Labor. Our "common
property", is not properly represented in the game, it has no real price and is therefore regarded
valueless. It has therefore been embezzled and misused.
Moreover, the only assumed goal of the system is to maximize each player's wealth, disregarding
other values like justice, education, health, the environment, cultural issues, etc.
We find that the Invisible Hand of the Narrow View of Capitalism is about to wipe us off the
chessboard. We are at the beginning of the perfect storm and are paying very little attention of the
alarm bells ringing all around us every day. We can hear them if we just listen a bit more diligently.
I say we must adopt a New broader Capitalistic Model. In this one we have a new production factor
- information and knowhow. Unlike the traditional factors it is unlimited and can grow.
We have to utilize energy sources that are renewable. The sun can supply in 8 minutes the total
energy we currently need annually.

14. Nobody can do everything
Everybody can do something
OECD
Well-Being Indicators
14 WELLBEING INDICATORS
There are countless things that we must do and that we must do quickly. It doesn’t really matter
what you do, just everyone do something and start doing it today. And it is clear that we are
allowed to err.
The finite goal is to contribute POSITIVELY to the environment (metaphorically we should Plant a
tree a year, while making sure that we are not generating a monoculture...). At an interim stage it is
needed to stop the waste, and reduce our energy, water, mineral consumption (what is called Eco-
Efficiency, Industrial Ecology, etc..)This may give little more time to find better solutions.
So many things to be done, it is practical job security for every single person on this planet. Imagine
– a fully, gainfully employed planet. It makes my heart smile.
3 Points of View
• What problem / there is no problem
• It is not MY problem…
– Somebody else should fix it
(Governments/NGOs/Bill Gates?)
• I am part of OUR problem
– What can I do?
15 3 POINTS OF VIEW
At this point in my presentation you probably have one of three points of view:
1. The first is that you really don’t see that a problem exists – maybe it is something invented by
the weird tree huggers? by the media or by people who just want to take the food out of our
mouths and money out of our pockets.
2. The second is that yes, you do see that there is a problem, but it’s not YOUR problem. It
should be solved by governments, or NGOs, or maybe by Bill Gates and other billionaires who
have ample idle money and time on their hands to spend
3. And third, and I believe this is the most powerful, but frankly, also the most challenging, view:
to recognize that this IS YOUR home, this is YOUR legacy, this is YOUR risk to manage and you
commit to being part of the solution – EVEN IF YOU DON’T YET KNOW what challenges and
commitments you will face in your path.

15. If this is OUR problem, what do WE
do next & what can I do now?
Step 1: Be Curious
16. IT IS OUR PROBLEM
For those of you who do believe that this is OUR problem, I’m sure you are already taking actions.
Several years ago people did an experiment in Sydney Australia, and this is now repeated in many
towns around the globe. They turned off electric switches at a particular moment, just to
demonstrate that it is quite easy to reach a significant joint effect, even where everyone is doing
only a minimal effort.
You can easily have a larger impact when your businesses will cut electricity, air conditioning, paper
consumption etc.
Leaving a positive impact requires more thinking, more effort, much creativity and innovation, and
strong leadership!.
For those of you who are on the edge, not quite certain that any of this is real, I urge you to take the
first step of any discovery: be curious. Do some of your own research and see what there is to see.

16. Reboot – Applied Technology
• ReLook
• ReLearn
• ReThink
• ReDesign
• ReStart
17: REBOOT
What Reboot urges us to do is to look at our world with fresh eyes, while removing screens that
distort our view . This is an essential step towards a Paradigm shift.
Maybe some of you saw the movie AVATAR. It describes a shift from a two dimensional black and
white reality, into a three dimensional colorful world. This is a paradigm shift. It has to start from a
new point of view.
We must ReLook at what’s in front of us, we must ReLearn about our place in the global web of
humanity. We must think differently about our challenges and then ReDesign how we live and what
we consider to be profitable.
And, as in any solid Reboot, we must ReStart – that is, to start doing things differently.
And only then if you get tired, you can Re-tire...
We can't teach you this in 20 minutes. However it can be done in 2-3 days workshop.

17. Insurance & Financial Sectors
• Most sustainable investment projects are long term
– They perfectly meet the needs of pension funds
• Focus on Investments that are supporting the Reboot
processes around the world
• Investing in “non-green” could, retroactively, be
disastrous to the lender
• We need to remove obstacles
• We must develop new indices
19. FINANCIAL SECTOR
The insurance industry could be world leader by focusing on sustainable wealth for the long run.
This is the point where insurers can play a major role, due to their special expertise. The Principles
for Sustainable Insurance (PSI) treaty that will be signed here means that the leading insurers in the
World declare that social and environmental challenges are put on the top of their agenda.
Secondly, Insurers, like everybody else could do the regular tasks of cutting energy consumption
and use of paper, etc.
But the most important achievement of the PSI, in my opinion, is that it may reshape the World's
future, through the long term investment process. Insurers and pension funds manage
approximately $70 trillion of investment money, and they have to reinvest several $ trillions
annually. These huge amounts are the main source of long term financing in the World. These
monies are the key to our future. The decision to emphasize environmental friendly investments
has a huge potential for reshaping and healing our world, as it will redirect at least $1-2 trillion
annually to environmental projects. What a huge leverage had been put into action!!
It pays. The investments in environmentally unfriendly industries - that for a while seemed more
attractive, didn't pay. Remember the retroactive suites in the asbestosis and toxic spill cases? We
have just experienced a judgment against several financial institutions that had to finance the clean-
up cost of a failing industry. The fact that they were the creditors and lost all money didn't help
them to defend the case . They were found negligent in lending money to a risky plant!
There is a need, of course, to make big changes in the regulatory requirement like Basel III and
Solvency II, to enable changing the focus of the industry from reporting on short term rates of
return on investment, well as the requirement to focus mainly on investments in marketable
securities. It is about time to let the insurers regain their traditional position in the long term
financial markets!

18. The Best Time to Act is Now
20 FOOTPRINTS
Sustainability means leaving no footprints. At this point it is too late- as we have to clean the results
of yesteryears' actions. We have to find the way to go beyond sustainability, and to leave POSITIVE
footprints.
If we learn from our mistakes, we are geniuses. If we don’t learn from them, we are fools …
Remember This Guy?
22. NERO
… like this guy!
Do you recognize the ancient face of Nero? Nero was the Roman Emperor who lives in infamy as the
guy who fiddled while the city of Rome burned.
But aren't we behaving the same way? The hair on our heads is burning, yet we are still having
business as usual approach. We have to be ever alert and mindful of the Nero in Us All – denial will
not help, ignoring the problem will not help. We must not just play with our fiddles, we must help to
put out the fires.
I hear the fire alarms ringing all around me every day … That is why I changed my focus years ago to
the environmental risks.

19. I am only One
23. WANGARI MAATHAI
Yes, none of us can do or fix everything that needs to be done or fixed, but we can all do something.
Like the late colleague, Dr. Wangari Maathai. Raised in a small village in Kenya, she went on to
become a Nobel Laureate for the extraordinary work she has done to save the soil and, plant
millions of new trees in Kenya and Africa. She helped shape a huge political movement that
empowered women, and made an enormous political impact that restored democracy in her
country.
She was only one, I am only one, you are only one.
Yet, we ARE one – so while we are here, let us all do what we can to help heal and sustain our
beautiful, fragile earth!
“You don’t drown by falling in the
water. You drown by staying there.”
Edwin Louis Cole
24. YOU DROWN IF YOU STAY
I leave you with a few thoughts about the challenges we face.
Rev. Ed Cole said it well. Falling in the water doesn’t drown us – it’s staying there that does the trick.
Let’s not stay in the water too long and drown.

20. “We pledge to help make the Earth a secure &
hospitable home for present and future generations.”
25. RIO SUMMIT
1992 Rio de Janeiro Earth Summit
Here in Rio in 1992, was the first time that we had a truly global conversation about what must be
done and it starts with a simple pledge that unifies us all.
This week the UN RiIO+20 Summit re-convene here (I am a member of the Israeli delegation to the
summit). The signing of the PSI under the umbrella of the heads of the UN and especially the UN
Environmental Protection Agency (UNEP) will probably be recognized as the most significant
practical outcome of the summit meetings.
The Earth pledge is:
“We pledge to help make the Earth a secure and hospitable home for present and future
generations.” Even though I don’t know how, I pledge this. Even though I cannot do it alone, I
pledge this.
I believe Heaven will be pleased when we succeed and weep for us if we don’t.

21. Thank You!
Stay Connected: Learn More:
Kahane@RebootHumanity.com www.RebootHumanity.com
+ 972-54-455-7137
26. THANKS
Thank you for your attention and your generous listening. I hope you all visit our non-profit site
where we explore what is needed and what is being done around the world.
As this conference proceeds, I look forward to meeting you so that together, we can discover how
to lead the world into a new chapter – the ReStart after the ReBoot.
Thank you.