GAR 2013 Main Report

242 Chapter 16

greater investments in disaster risk reduction from all levels—businesses; local and national governments; communities; and households.

16.4

Towards public-private

risk governance

As businesses start to scrutinize the levels of disaster risk internalised in cities and countries before making investment decisions, this will change their investment behaviour over time. In turn, risk-sensitive business investment will provide an important incentive for improved disaster risk management and increased investment in risk reduction by national and local governments.

Managing risks to strengthen competitiveness

At present, hazard-exposed cities and countries often hide or dissimulate their disaster risk to attract investment. There is only anecdotal evidence that cities and countries that effectively manage their disaster risk are more successful at attracting investment than those who understate and underplay their risk levels. However, as open access risk information becomes increasingly available to business, and as business becomes more aware of disaster risk, competitiveness strategies based on risk denial will become less effective.

As disaster risk starts being factored into business investment decisions, countries with lower risks or which can demonstrate that their disaster risks are effectively managed will have a comparative advantage to attract investment. From this perspective, attracting continued investment is likely to become one of the primary motivations for strengthening disaster risk management at the national and local levels.

Some governments are already beginning to include disaster risk management as part of their competitiveness agenda. This implies that disaster risk management will have to be integrated into the

work of trade and investment boards and ministries. For example, information should be provided on disaster risks and how they are being managed to potential investors and that information needs to be factored into the planning vehicles aimed at attracting investment in manufacturing and services, such as special economic zones, and into the granting of concessions for mining, oil and gas, timber and agriculture.

Risk-sensitive business investment will also generate a demand for analysis and forecasts that include rather than ignore disaster risk. And as that analysis is generated, it will encourage countries to invest further in disaster risk management. If, at the same time, disaster risk management is integrated into the many different competitiveness indices, ^iv this will provide further incentives, generating a virtuous circle in which countries and cities invest in disaster risk management to enhance their competitiveness, and businesses invest more in those countries that can demonstrate effective risk management.

In the case of some very high-risk countries, such as SIDS, strengthening disaster risk management may be the most effective way to increase competitiveness. As highlighted in Chapter 7, given their geography and small size of their economies, SIDS have many constraints to enhancing competitiveness. Precisely because such a large proportion of their capital and investment is at risk, reducing that risk can be their best chance to strengthen competitiveness and attract investment.

New approaches to risk governance

GAR11 laid out the case for integrating disaster risk management into public investment planning and called for the strengthening of risk governance in which finance and planning ministries play a key role. This built on the findings of GAR09, which highlighted the need for strengthened partnerships between national and local governments and local communities.

Evidence presented in this report shows that risk