GAR 2013 Main Report

Private investment largely determines disaster risk: In most economies

70–85 percent of overall investment is made by the private sector,

including annual

institutional investments worth more than US$80

trillion globally. Both regulators and investors are increasingly demanding that

businesses disclose their hidden risks, including disaster risks (Chapter 12).

It’s no longer “business as usual”: Recent major disasters such as

Hurricane Sandy in 2012 and the 2011 floods in Thailand focused attention on the

growing impact of disasters on the

private sector (Chapter 1). Many large

global businesses are now strengthening their risk management capacities. Yet,

businesses still display a

‘blind-spot’ to disaster risk, which is largely

ignored in

economic forecasts and growth projections (Chapter 12).

Insurance is critical to business resilience. Yet insurance pricing often

does not reflect risk levels or provide an adequate incentive for risk sensitive

business investment, particularly in low and middle income countries with low

penetration rates but rapidly growing markets (Chapter 13). In China, for example,

only 3 percent of properties are insured against earthquake and 5

percent against typhoons and floods.

Governments report significant progress in developing more

effective disaster

response and preparedness strategies and are investing more to address

risks. Yet, the required shift to

anticipate risks in public and private

investment remains a challenge for most(Chapter14). The number of export

oriented Special Economic Zones has expanded from 176 zones in 47

countries in 1986 to 3,500 zones in 130 countries in 2006. Many such zones are

located in hazard-exposed areas increasing disaster risks.