"Economic losses from disasters are out of control and can only be reduced in partnership with the private sector."
These words by Ban Ki-Moon, Secretary-General of the United Nations, highlight the need for business and government leaders to act now. Since the creation of the major governance bodies in the middle of the last century, fundamental shifts in global politics and the economy mean that today’s challenges go beyond the mandate or ability of the public sector alone.
GAR13 provides evidence that shows the growing impact of disasters on business through escalating direct losses, supply chain interruptions and wider effects on performance and reputation. As a consequence of these impacts, businesses are becoming increasingly aware of the need to address disaster risks across their whole value chain.
Whilst there is an emerging alignment of the international agendas on sustainable development, climate change and disaster risk reduction, much practical action is required to build long-term resilience. The private sector is critical; it must become one of the drivers of change.
DECREASE shared risks
Worse is yet to come. That is the clear and unequivocal message of the UN Global Assessment Report on Disaster Risk Reduction released in May 2013. The scientific case for action, reinforced by the Intergovernmental Panel on Climate Change (IPCC) in September 2013, is aligned with the economic case for action with unprecedented losses in recent years from super disasters in the United States, Japan, the Philippines, Thailand, Australia, New Zealand, the EU, Pakistan, India and beyond. Yet, “business as usual” investment continues in areas of known high hazard such as river basins and low-lying coastal regions. This accumulation and concentration of risk is beyond any single nation to manage. Public-private sector collaboration has already proven its worth in the 2011 disasters in Japan and New Zealand. The opportunity before us is to unlock the broader potential to de-risk our future, your future.
INCREASE shared value
Instead of continuing to create shared risks, risk-sensitive investment can begin to create shared value. When devastating earthquakes hit New Zealand in 2010 and 2011, at least one company was prepared. Energy provider Orion invested $6 million into making its utility network disaster resilient and as a result was able to continue operations through its upgraded facilities during and after the earthquakes. The company is estimated to have saved $30 to $50 million in direct asset replacement costs alone. Moreover, Orion directly contributed to substantial savings to Christchurch’s economy and society due to its ability to continue to provide electricity during and after the disaster. It is in this way that disaster risk-sensitive business investment and practice creates shared value for individuals, businesses and societies as a whole.