GAR 2015 Main Report

viii

As the economy becomes more global, investment tends to flow to locations that offer comparative advantages, including low labour costs, access to export markets, infrastructure and stability. Investment decisions rarely take into account the level of hazard in those locations, and opportunities for short-term profits continue to outweigh concerns about future sustainability. As a consequence, large volumes of capital continue to flow into hazard-prone areas, leading to significant increases in the value of exposed economic assets.

( → Chapter 10)

Over the last 10 years, there has been significant progress in strengthening disaster preparedness, response and early warning capacities and in reducing specific risks, according to the HFA Monitor. However, progress has been limited in most countries when it comes to managing the underlying risks. ( → Part II )

The continuous mispricing of risk means that consequences are rarely attributed to the decisions that generate the risks. This lack of attribution and accountability creates perverse incentives for continued risk-generating behaviour, as those who gain from risk rarely bear the costs. As such, new risks have been generated and accumulated faster than existing risks have been reduced. ( → Chapter 10)

An enormous volume of capital is expected to flow into urban development in the coming decades, particularly in South Asia and sub-Saharan Africa. Some 60 per cent of the area expected to be urbanized by 2030 remains to be built. Much of the growth will occur in countries with weak capacities to ensure risk-sensitive urban development. ( → Chapter 11)

The continuous “mispricing of risk” threatens

our future

	viii As the economy becomes more global, investment tends to flow to locations that offer comparative advantages, including low labour costs, access to export markets, infrastructure and stability. Investment decisions rarely take into account the level of hazard in those locations, and opportunities for short-term profits continue to outweigh concerns about future sustainability. As a consequence, large volumes of capital continue to flow into hazard-prone areas, leading to significant increases in the value of exposed economic assets. ( → Chapter 10) Over the last 10 years, there has been significant progress in strengthening disaster preparedness, response and early warning capacities and in reducing specific risks, according to the HFA Monitor. However, progress has been limited in most countries when it comes to managing the underlying risks. ( → Part II ) The continuous mispricing of risk means that consequences are rarely attributed to the decisions that generate the risks. This lack of attribution and accountability creates perverse incentives for continued risk-generating behaviour, as those who gain from risk rarely bear the costs. As such, new risks have been generated and accumulated faster than existing risks have been reduced. ( → Chapter 10) An enormous volume of capital is expected to flow into urban development in the coming decades, particularly in South Asia and sub-Saharan Africa. Some 60 per cent of the area expected to be urbanized by 2030 remains to be built. Much of the growth will occur in countries with weak capacities to ensure risk-sensitive urban development. ( → Chapter 11) The continuous “mispricing of risk” threatens our future	Page 1 Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 ->Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 30 Page 40 Page 50 Page 60 Page 70 Page 80 Page 90 Page 100 Page 110 Page 120 Page 130 Page 140 Page 150 Page 160 Page 170 Page 180 Page 190 Page 200 Page 210 Page 220 Page 230 Page 240 Page 250 Page 260 Page 270 Page 280 Page 290 Page 300 Page 310