Global Assessment Report on Disaster Risk Reduction 2013
From Shared Risk to Shared Value: the Business Case for Disaster Risk Reduction

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of disaster and size of business. Large global businesses are rarely at risk from smaller extensive disasters, but may be severely affected by major intensive events such as the 2011 Great East Japan Earthquake or the 2011 Chao Phraya river floods in Thailand. Such intensive disasters often cause massive direct capital losses to factories, plant and stock as well as to critical infrastructure such as ports, airports, power stations and urban mass transit systems.
For example, on 11 March 2011, the Great East Japan Earthquake and tsunami generated direct losses of about US$206 billion, iii representing approximately 20 percent of average annual gross fixed capital formation from 2008 to 2012. iv Similarly, direct losses from the Chao Phraya river floods were approximately US$45.7 billion, which equals more than 60 percent of Thailand’s average annual gross fixed capital formation from 2006 to 2010. v Because so many businesses suffered simultaneously, the respective national economies were severely impacted. For example, at the beginning of 2011, Japan’s projected annual GDP growth was 1.5 percent. Following the Great East Japan Earthquake, GDP fell by 3.1 percent in the first quarter of 2011 and by 2.1 percent in the second quarter of 2011 (Funabashi and
Takenaka, 2012). In Thailand, owing to damage to industrial estates vi by the Chao Phraya river floods, GDP fell by 9.0 percent in the fourth quarter of 2011 compared with the same quarter in 2010.
Following intensive disasters large global businesses may be less hard-hit owing to diversified facilities and operations spread over many countries and regions and to insurance coverage; often only a small percentage of such companies’ global capital stock is affected at any given time.
Micro and small and medium enterprises (SMEs)vii  play an important role in low, middle and high-income economies. They account for one-third of low-income countries’ employment, and estimates of their contribution to total employment in high-income countries range from more than 50 percent (IFC, 2012

IFC (International Financial Corporation). 2012.,“IFC and Small and Medium Enterprises”., IFC Issue Brief., International Finance Corporation,. .
) to 65 percent in OECD countries (UNDP, 2004

UNDP (United Nations Development Programme). 2004.,Reducing Disaster Risk, a Challenge for Development., Bureau for Crisis Prevention and Recovery., New York.,USA.. .
) and 70 percent globally (ILO, 2012

ILO (International Labor Office or Organization). 2012.,Global Employment Trends 2012., Geneva,Switzerland: ILO. .
). In addition, they contribute between 51 percent and 55 percent of GDP in high-income countries (UNCTAD, 2005

UNCTAD (United Nations Conference on Trade and Development). 2005.,Improving the Competitiveness of SMEs Through Enhancing Productive Capacity., United Nations., New York and Geneva.,UNCTAD/ITE/TEB/2005/1. .
; Dalberg, 2011

Dalberg. 2011.,Report on Support to SMEs in Developing Countries through Financial Intermediaries., Dalberg Global Development Advisors.. .
) and play a fundamental role in community dynamics (GAR 13 paperUNDP, 2013

GAR13 Reference 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.
The informal business sector also plays a key role in employment in many economies. Smallholder
(Source: World Bank, 2012a

World Bank. 2012a.,World Development Report 2013: Jobs., Washington DC: World Bank,. .
) Figure 1.2
Share of wage and non-wage employment across the globe
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