GAR 2013 Main Report

184 Part III - Chapter 11

plan in place is key in explaining business performance after major events (Corey and Deitch, 2011

Corey, C. and Deitch. E. 2011.,Factor Affecting Business Recovery Immediately After Hurricane Katrina., Journal of Contingencies and Disaster Management, Volume 19, No. 3, September 2011.. .

), but, as Figure 11.1 shows, a survey carried for this report in six disaster-prone cities of the Americas ⁱⁱ highlighted that less than one-fifth (19.4 percent) of all surveyed businesses had a business continuity plan, and in highly risk-prone cities such as Bogota and San José, the percentage was even lower. Similarly, almost one-fourth was unable to estimate costs of a major disruption to their business (Sarmiento and Hoberman, 2012). In fact, although many methods and tools exist to meas ure the value and exposure of business interruption, there are difficulties in assessing this fully against other dimensions that need to be considered, i.e. time, revenue and costs.ⁱⁱⁱ

In particular, small and medium enterprises (SMEs) are more likely to lack risk awareness or struggle to find the capacity to manage disaster risks, mainly owing to financial, human resource and technical limitations (Wedawatta et al., 2010

Wedawatta, G., Ingirige, B. and Amaratunga, D. 2010.,Building up resilience of construction sector SMEs and their supply chains to extreme weather events., International Journal of Strategic Property Management (2010)Vol.14: 362-375.. .

; Corey and Deitch, 2011

Corey, C. and Deitch. E. 2011.,Factor Affecting Business Recovery Immediately After Hurricane Katrina., Journal of Contingencies and Disaster Management, Volume 19, No. 3, September 2011.. .

; Battisti and Deakins, 2012

Battisti, M. and Deakins, D. 2012.,Business Measure Perspective from New Zealand Small Firms: Crisis Management and the Impact of the Canterbury Earthquakes., New Zealand Center for Small and Medium Enterprise Research, Massey University.. .

). Of companies with at least 500 employees, about 45 percent had a business continuity plan or crisis management programme in place, but companies with less than 100 employees, as few as 14.2 percent had a plan (Figure 11.1).^iv

These findings are validated in other regions (Villarroel, 2012

Villarroel, M.I. 2012.,Micro, Small, and Medium Enterprises (MSMEs) and Disasters., Background Paper prepared for the 2013 Global Assessment Report on Disaster Risk Reduction., Geneva,Switzerland:UNISDR.. .

). SMEs are often more vulnerable per se and more likely to be located in less-resistant buildings and have a smaller, more localised customer base ( GAR 13 paper

UNDP, 2013

UNDP (United Nations Development Programme). 2013.,Small Businesses: Impact of Disasters and Building Resilience., Background Paper prepared for the 2013 Global Assessment Report on Disaster Risk Reduction., Geneva,Switzerland: UNISDR..
Click here to view this GAR paper.

; Battisti and Deakins, 2012

). They usually do not engage in hazard management programmes and lack financial resources for recovery (Villarroel, 2012

; Vitez, 2009).

Few SMEs have been able to articulate the case for or to strengthen their capacities to manage disaster risks. Where the case has been made, however, emphasis is on preparedness, such as evacuation plans and response measures, rather than on prospectively managing disaster risks (Sarmiento and Hoberman, 2012; GAR 13 paper

UNDP, 2013

). Very small and family-owned businesses—for example, fishing enterprises in low and middle-income countries—face even tighter constraints on their ability to invest in risk reduction. However, as Box 11.2 explains, certain simple measures have enabled businesses to survive disasters.

(Source: Cuevas, 2012

Cuevas, J. 2012.,Good practices used at the Peninsula de Yucatan, Mexico., CIESAS.. .

)

Box 11.2 Successfully reducing losses on the coast of Yucatan, Mexico

Hurricane Isisdore struck the southeastern coast of Mexico in 2002, resulting in economic losses of US$500 million on the Peninsula of Yucatan. Of this, US$8 million were estimated damages to the fishery industry, mainly from loss or damage of fishing boats and boat motors. The hurricane severely impacted small producers and holders of small ruminants, chicken and pigs. Learning from this experience, farmers and fishermen with the support of local governments developed risk management strategies to reduce future losses. These included safeguarding fishing equipment, such as boats and motors, and relocating farms to safe areas.

The local government of the municipality of San Felipe purchased land two kilometres from the shore and distributed it to 60 small producers. Although farmers remained in their original villages, they moved their livestock to safe ground. Similarly, fishermen negotiated access to cattle trucks and storehouses 15 kilometres inland where they could keep their fishing equipment safe. These strategies saved them approximately US$35,000 per fisherman when in 2005, Hurricane Wilma hit.

Neighbouring municipalities have since adopted these risk-reducing strategies; it has been estimated that each municipality has saved about US$6.5 million.