Disaster resilience is a core business issue

GENEVA, 13 July 2017 – Businesses of all sizes need to ensure that resilience lies at the core of their decision-making processes in order to help the authorities and the wider community reduce the risk of disasters.

The UN Office for Disaster Risk Reduction (UNISDR) works hand in hand with companies to ensure that curbing the threat posed by natural and human-induced hazards etched into business strategies.

“The private sector is taking an active role to reduce disaster risk across their value chain, whether it be across their organization assets, people, suppliers, customers or supply chain. It's good business and provides agility in being able to respond to rapidly changing market conditions,” said Mr. Oz Ozturk, a partner at PwC and co-chair of the UNISDR Private Sector Alliance for Disaster Resilient Societies, which is known for short as ARISE.

“We have found the organizations and economies that benefit most are the ones which have made these strategic and operational decisions hand in hand with governments and communities. This is because all parties bring insights and knowledge which helps protect the ecosystem and allows a more holistic approach in investing for disaster resilience.”

“Ultimately the investments across the value chain are relevant and sustainable.”

In March 2015, the international community adopted the Sendai Framework for Disaster Risk Reduction, a 15-year plan to make countries more resilient. It was the first building block of the wider 2030 Agenda for Sustainable Development.

The Sendai Framework puts the onus on governments to bring about change, but is relatively unusual in the world of international agreements in that it says that other players also have a specific role. The private sector is one of those singled out in the accord.

Given that sharp focus on the role of business, UNISDR and its partners created ARISE in November 2015, building on several years of work.

ARISE aims to leverage business resilience know-how and encourage investment decisions that take disaster risk into account, in order to help the private sector to play its role in implementing the Sendai Framework through to 2030.

A focus on the private sector is crucial, given that global disaster losses have swollen to an estimated US$520 billion a year owing to factors including climate change, rapid urbanization and the expected growth of risk-exposed assets. This growth in risky investments is often due to a lack of adequately costing disaster risk, coupled with high profit margins for investments in many areas exposed to earthquakes, tsunamis, storm surges, floods and other hazards.

“Mitigation is something that we decide. A disaster happens because we didn’t make the right choices,” said Mr. Aris Papadopoulos, former chief of construction materials group Titan America and founder of the Resilience Action Fund, who is an ARISE board member.

“The road to disaster is paved with a profit for people who benefit from non-resilient investment,” he added.

In the event of a disaster, the cascading impacts result in losses far beyond that of the principal investor. The resilience of businesses is critical – whether they are one-person operations or multinationals whose supply chain disruptions can sow global havoc – notably because the private sector is responsible for 75 percent of investment in infrastructure.

ARISE, which has 140 member organisations to date, also aims to help small- and medium-sized enterprises reduce their risk. Such firms account for over 80 percent of employment, meaning that their ability to withstand shocks is important to help communities get back on their feet fast.

At the 2017 Global Platform for Disaster Risk Reduction, in Mexico in May, ARISE issued a landmark seven-point plan for resilience.

It begins with a call for the “Build Back Better” principle to be the core of planning, development, recovery and reconstruction – from building codes to government tenders and contracts. 

Second, it says it is vital to create incentives for businesses to invest in risk reduction and resilience in advance of disaster. Third, it calls for a more integrated approach to upgrading key infrastructure and to give local authorities more say over policy.

Fourth, it says that businesses need to be involved before, during and after disaster.  Fifth, it argues that businesses and their public sector and civil society partners should promote the benefits of resilience to consumers, and sixth, extend education and professional training.

Finally, it underscores the need to harness the potential of data and technology to ensure effective implementation of resilience and risk reduction measures.

Reducing disaster risk is also a vital component of efforts to achieve the meet aims of the Sustainable Development Goals and the Paris Agreement on climate change, both adopted by the international community at the end of 2015.

“Climate adaption is a subset of resilience. And resilience is one of the best ways to address climate issues,” said Mr. Papadopoulos.

“A green investment that’s not resilient is in fact not green, nor is it sustainable,” he added.