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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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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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Part I - Chapter 5
5.1
Threats to economic resilience
Direct losses from major disasters trigger indirect losses and wider impacts that can challenge the macroeconomic stability of even high-income countries. A country wishing to promote its competitiveness and strengthen economic sustainability should recognise the potentially significant macroeconomic implications of disasters.
Risk refers to the probability of a given magnitude of loss in a given period of time. Resilience refers to the capacity of a country’s economy to absorb losses and recover. How quickly an economy recovers and how quickly a business recovers are clearly interrelated. But businesses are more likely to recover faster in a country where governments have the capacity to invest in recovery or where they have risk financing measures in place that cover most contingencies.
Business investments are made taking into account a variety of risks, including disaster risk. However, while
immediate risks to assets and operations may be considered, it is equally important for
investors to be aware of the
economic resilience of the country they are investing in.
Businesses are more likely to recover faster in a country where governments have the capacity to
invest in recovery or where they have risk financing measures in place that cover most contingencies.
Major losses can challenge the macroeconomic stability of even high-income countries. Given that
macroeconomic stability is considered a basic requirement of a country’s competitiveness,
countries need to recognise the potential macroeconomic implications of disasters. Currently, some countries that
can least afford to lose investment stand to suffer the highest disaster losses.
High losses and potential fiscal gaps can result in cumulative macroeconomic effects over time with
severe implications for a country’s long-term economic and fiscal resilience.
(Source: UNISDR, based on national disaster loss data bases, EMDAT and World Bank indicators)
Figure 5.1 Reported disaster losses and GFCF in Mozambique, 1993–2011
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