GAR 2013 Main Report

239

more likely to have addressed disaster risks in their supply chains and to have increased their resilience. And the disaster risks they have decided to accept will be explicit rather than hidden on their balance sheets. More importantly, they will have recognised that investing to avoid shared risks and costs and to address the underlying risk drivers, in partnership with the public sector and civil society, is not only good but essential for business itself. Unless those shared risks are transformed into shared values future business will be neither competitive and sustainable nor resilient.

Already, nascent practices are starting to bring this emerging paradigm shift from generating shared risks to creating shared value into focus, opening new doors, encouraging further questioning, exploratory practices and innovative research. As Figure 16.1 shows, these practices suggest five broad areas of opportunity for business that in time may redefine the practice of disaster risk management.

16.2

Putting the disaster into

corporate risk management

As business awareness of disaster risk grows, more and more businesses will expand their existing risk management strategies to include disaster risk. While they are currently addressing disaster risk through the lens of business continuity planning, several businesses are gradually shifting their focus from preparing for and responding to disasters to identifying, analysing and managing disaster risks.

From business continuity planning to disaster risk management

As discussed in Chapter 11, most businesses are currently addressing disaster risk through the paradigm of business continuity planning. Analogous to emergency preparedness and response approaches in the public sector, business continuity planning enables businesses to identify potential threats to their operations and supply chains and to develop

contingency plans that enable business to be resumed quickly and with minimal disruption. By offering immediate and visible benefits, in terms of predictability and reduced losses, business continuity planning is essential to any corporate risk management strategy.

But while essential, it is only a part and not the whole. Businesses not only need to strengthen their resilience when disasters occur but also measure how their investment decisions are modifying the levels of disaster risk they face. By shifting their focus from exogenous threats to how risks are constructed through investment decisions, firms will achieve a major conceptual shift in business culture with implications for where risk management functions are located in an organisation and the profile of risk managers.

As Chapters 11 and 15 highlighted, investments are currently being made in developing new applications and platforms for visualizing and managing the disaster risks businesses face. As these and other platforms are brought to the market, corporate risk managers will have access to tools that can enable disaster risk to be integrated into broader risk management efforts, beyond the narrow focus on business continuity planning. Such frameworks and platforms can also facilitate knowledge networking with peers, scientific institutions and the public sector.

The conceptual shift from managing disasters to managing risks will be facilitated in businesses where risk management is already viewed as an integral part of investment planning and corporate strategy rather than as a specialised department that helps the business plan and manages contingencies. The shift will also be facilitated in those businesses where the risk management function includes staff with a broader understanding of the dynamics of risk rather than staff with a security and emergency management background.