By BONG D. FABE, Associate Editor
THE proven formula for economic development, public-private partnership (PPP), must also extend to disaster risk reduction as well as building disaster-resilient communities, the United Nations Office for Disaster Risk Reduction said in a new 288-page report.
In the “2013 Global Assessment Report on Disaster Risk Reduction (GAR13): Creating Shared Value: the Business Case for Disaster Risk Reduction”, the United Nations International Strategy for Disaster Reduction (UNISDR) called on the world’s business community to incorporate disaster risk management into their investment strategies and to partner with the public sector to avoid further losses.
“The principles of disaster risk reduction must be taught at business schools and become part of the investor’s mind-set,” UN Secretary-General Ban Ki-moon said during the launch of the report last Wednesday.
GAR13 stressed that prevailing business models in urban development, agribusiness, and coastal tourism — three key investment sectors — continue to drive disaster risk, and called for partnerships between the government and private sector to put in place and improve crisis management strategies
According to the UN, economic losses from disasters are spinning out of control and it is high time for the business community (including investment banks and insurance companies) to do its share in reducing risk by making disaster risk management a core part of its investment strategies.
GAR13, which carried out reviews of disaster losses in 56 countries, found that direct losses from floods, earthquakes and drought have been underestimated by at least 50 percent. In this century alone, losses from disasters amount to some US$2.5 trillion while annual average losses from earthquakes and cyclonic winds are pegged at US$180 billion.
“Let us not shy away from the meaning of these numbers: Economic losses from disasters are out of control. They can only be reduced in partnership with the private sector, including investment banks and insurance companies. For too long, markets have placed greater value on short-term returns than on sustainability and resilience. At long last, we are coming to understand that reducing exposure to disaster risk is not a cost but an opportunity to make that investment more attractive in the long term,” Ban said in his speech, a copy of which was emailed to this reporter.
Ban added: “Governments bear the primary responsibility for disaster risk reduction. But, the level of risk is also related to the where and how of investment by the private sector, which is responsible for 70 to 85 percent of worldwide investment in new buildings, industry and critical infrastructure. In the years ahead, trillions of dollars will be invested in hazard-exposed regions. If that money fails to account for natural hazards and vulnerabilities, risk will increase. Where such spending does address underlying risk factors, risk will go down. Our challenge is to be on the right side of that ledger — the smart side, the prevention side.”
To avoid a future of losses, there should be a transformation of attitudes in managing disaster risk in both private and public sectors, GAR13 said.
“Disaster risk management reduces uncertainty, builds confidence, cuts costs and creates value. More private sector senior executives are coming to recognize this. But growing recognition must be translated into a more systematic approach to disaster risk management that will make tomorrow’s world a safer place,” Ban noted in his Foreword to the Report, as he urged “governments, civil society and, in particular, the private sector to strengthen their partnerships for a safer future.”
In order to do this, the GAR13 report demanded that businesses disclose their hidden risks, including disaster risks, as it noted that while “many large global businesses are now strengthening their risk management capacities [many] businesses still display a ‘blind-spot’ to disaster risk, which is largely ignored in economic forecasts and growth projections.”
GAR13 cautioned businesses from cultivating a “business as usual” attitude especially since “most disasters that could occur haven’t happened yet.”
“Total expected annual global loss from earthquakes and cyclone wind damage alone now amounts to US$180 billion per year. This figure does not include the significant cost of local disasters from floods, landslides, fires and storms or the cost of business interruption,” it said.
GAR13 also identifies encouraging signs of change. “Public-private partnerships in risk management have proven their worth during several disasters, including the 2010 and 2011 earthquakes in Christchurch, New Zealand.”
Margareta Wahlström, Ban’s special representative for disaster risk reduction and head of the UNISDR, said that while there are notable changes in the attitudes of business, this transformation should extend to a “more systematic approach to disaster risk management in partnership with the public sector to make the world a safer place.”
Wahlström urged the business community, in partnership with the government, to “invest today for a safer tomorrow,” which is also the theme of this week’s (May 20-23) Global Platform for Disaster Risk Reduction conference in Geneva.