Achieving this is done by framing the conversation in a way that people understand the probability of an event is much higher than they think, he said.

“It is very, very hard to get people to pay attention–risk managers and individuals–to these low probability, high consequence [events] that are often below their threshold level of concern,” said Mr. Kunreuther.

“There's a notion that it's not going to happen to me until after the disaster occurs, and even after it happens, people will say I'm not going to worry too long about it. It's just another crisis on my agenda.”

Dealing with this “myopia and denial” requires people to make more of an investment in risk transfer, he said. The best way to achieve this goal is with multiyear contracts, he said, thereby ensuring “stability in the long run.”

He noted that too often people focus on the short term, and after a few years fail to understand the value of risk transfer and often drop coverage.

“It is tough to get across that the best return is no return at all” on an insurance policy, he said.

Mr. Bosman noted that when it comes to risk mitigation spending, corporations spend on what they perceive to be their biggest exposure and prioritize spending from that point. The challenge, he said, is to get senior management to understand that it needs to believe in the probability that they need to prepare for all risks.

“There needs to be an acknowledgement that these natural catastrophes are real and there is not much upside in debating probability and using probability not to take any action,” said Mr. Bosman. “We can empower ourselves to take some action. There doesn't have to be complete destruction and damage. There is a lot of preventive action that can be taken.”