Some months ago, in the daily flood of articles about September 11, I came across a story that really struck me. It was the story of Warren Buffett, the famed international investor. Long before September 11 it had occurred to him that losses caused by large-scale terrorism could become a major problem for insurance companies. But he did not convert thought into action. In his annual shareholder's letter, Buffett admitted his mistake: "I violated the Noah rule: predicting rain doesn't count, building arks does."

In my remarks this morning, let me stick closely to the Noah rule. I want to try to predict the kind of bad weather the international community is likely to face, and then suggest what kind of a security ark we must build to deal with it.

So what kind of storms do we need to prepare for?:

My first prediction: more instability in the years ahead. The Caucasus, Central Asia, Northern Africa and the Middle East all offer a rich current and potential cocktail of instability. All of these regions are going through political and economic transitions of historic dimensions. Ultimately, I am confident that these changes will lead them in the right direction. But only the most blinkered optimist would argue that this process of change will happen without major convulsions.

My second prediction: more spillover. Instability will not be confined to the areas in which it originates. There will be spillover into Europe and North America. Spillover through migration, rising numbers of people seeking asylum, a booming industry in people smuggling, and all that goes it with it: violence, drugs - you name it. In short, geography will no longer act as our shield.

My third prediction: more terrorism. On September 11, 2001, a threshold was crossed. Until then, most of us shared the view expressed by a well-known terrorism expert: "terrorists want a lot of people watching, not a lot of people dead". Since September 11, that rule no longer applies. A special breed of terrorism has come to the fore - driven not by achievable political aims, but by fanatical extremism and the urge to kill. It is difficult to imagine how one could return this cruel genie to its pre 9/11 bottle.

My fourth prediction: more failed states. September 11 reminded us that even in an age of globalisation the state remains the central organising principle of modern civilisation. But not every state is sustainable. In the past decade or so, we have seen states collapse, fragment into numerous small regions, run by warlords, who finance themselves by drug smuggling and other criminal activities. As Afghanistan has demonstrated, such failed states are a safe haven for terrorists.

Of course, we can address this problem. We can deal with failed states. In Bosnia, we intervened, and we stopped the slaughter. But if you applied the Bosnia template to Afghanistan, you would need to deploy some 700,000 soldiers. This is not a practical option.

My next prediction: more proliferation. Despite the best efforts of our diplomats and counter proliferation experts, the spread weapons of mass destruction will be a defining security challenge of this new century. It will lead to more fingers on more triggers. Not all of these fingers will belong to rational leaders. In such a situation, deterrents may not always deter.

Keep in mind also that the problem of proliferation is not confined to nuclear, biological or chemical weapons. Transfers of conventional arms are a problem, too. We already have ample proof that conventional weapons can fan the flames of regional conflict.

What does all of this add up to? Bluntly put, it adds up to a guaranteed supply chain of instability. It adds up to an uncomfortable security environment that will pose difficult and probably unforeseeable challenges. A security environment that does not afford us the luxury of fighting theoretical battles about what is "in" and what is "out-of-area". We will have to look at threats functionally, not geographically. We will have to be able to act wherever our security and the safety of our people demand action.

This is a bleak picture and it neither surprising nor novel you know it, I know it, many people fear it. And yet, I remain optimistic that none of these challenges will overwhelm us.

Why? Because we have the capacity to shape events, not be their victims. Figuratively speaking, we do not have to fear that the rain will drown us. Because, like Noah, we know how to build an ark, to stay afloat, and weather the storm. Let me give you my rough sketch of the kind of ark we must build.

The first plank is military capability. Military capability is the crucial underpinning of our safety and security. It directly translates into political credibility. As Kofi Annan once said, you can do a lot with diplomacy, but you can do a lot more with diplomacy backed up by the threat of force. Indeed, in the real world, the more military capabilities you have, the less you may need to use them.

But we need capabilities for the future, not for the past. We need more wide-bodied aircraft, and fewer heavy tanks. More precision guided weapons, deployable logistic support troops, ground surveillance systems, and protection against chemical and biological weapons. We need forces that are slimmer, tougher, and faster; forces that reach further, and can stay in the field longer.

Reshaping our military capabilities is a key investment in our future safety. We defence anoraks know this. But we must also make sure that our populations also understand it.

So NATO’s Prague capabilities commitment, and the EU's headline goal, are essential components for our collective ark.

The second plank of our ark is consultation. In today's world, no country can ensure its security entirely on its own. You need Allies. You need Partners. You must stand together against terror, consult on threats, coordinate responses, share risks and burdens. NATO is the key consultation forum that brings together North America and Europe. We must use this forum to its fullest extent -- and not shy away from putting even the most controversial topics on our agenda. For if an issue does not belong here, in the centre of our community of like-minded nations, where else does it belong?

Our third plank: NATO-Russia relations. Once upon a time, most people in the West looked at Russia as part of the problem. No more. Today, Russia is very much part of the solution. We still have differences. And there may be some security challenges that could be resolved without Russia. But there many more security challenges that can be resolved with her: terrorism, proliferation, ballistic missiles, crisis management, to name just the most obvious.

That is why cooperation between NATO and Russia holds such great potential. The new NATO-Russia Council is the key to unlock this potential. I believe it has been under noticed and under estimated but the NATO-Russia Council has got off to a good start. Now we must build on this momentum.

Our fourth plank: broader cooperation. The attacks of September 11 were masterminded by a Saudi who lived in Central Asia. They were planned by people who came from the Eastern and Southern shores of the Mediterranean, who lived in Western Europe, and who finally carried out their attacks on the North American continent. Nothing illustrates better the need to for security cooperation beyond Europe. If we want to prevent such tragedies from occurring again, we have to build mechanisms of cooperation that extend to Central Asia as well as to the Mediterranean.

These mechanisms already exist, even if they don't feature prominently in the headlines. The Euro Atlantic Partnership Council, the Partnership for Peace, and the Mediterranean Dialogue, all under NATO’s umbrella, make a vital contribution to a new quality of security within and beyond Europe. That's why we need to nurture these mechanisms. And why we need to make them even more attractive to our Partners.

The final plank in our ark: institutional cooperation. NATO has never been a solo-player in security. In today’s strategic environment, military, political and economic challenges have become too intertwined to be met by a single institution. You need the UN to provide political legitimacy and civil administration. You need the OSCE to organise elections after a conflict. You need NGO's to help mend the torn fabric of a society that has been at war. And you need the EU to yield its enormous political and economic leverage.

Most observers have yet to grasp the enormous potential that institutional cooperation offers. NATO-EU relations are the best example. Last year, when trouble was brewing in the Former Yugoslav Republic of Macedonia, NATO and the EU went in -- before CNN told us to go in. We averted a civil war. Sounds simple; it was not, but it was the outcome. So the practice works. Once we have managed to sort out the remaining theory of the NATO-EU interface, we will be able to achieve even more.

That is my blueprint for tomorrow’s security ark. You may have other planks to add. I hope so. This conference is an opportunity for NATO to listen, to take a final rain-check on our Prague agenda.

It is hard to overestimate the importance of our Prague Summit. It will invite new members to join, ending Europe's Cold War division for good, and setting the stage for a wider NATO. It will deepen NATO's Partnerships with our neighbours to our East and South.

It will give NATO a clearer profile in combating terrorism, and in responding to the challenges posed by the proliferation of weapons of mass destruction. And it will meet the challenge of improving NATO's defence capabilities, with new commitments, new targets, and concrete new improvements.

All these decisions will reaffirm the transatlantic relationship as a central pillar of international security -- indeed, of international order. They will reaffirm NATO as the embodiment of meaningful transatlantic defence cooperation. And they will reaffirm NATO's undiminished relevance for our safety and security.

There is no prize for predicting rain. There is only a prize for building an ark. At Prague, the contours of this ark will become visible.