GAR 2015 Main Report

210

Part III - Chapter 10

Risk-sensitive business investment

The role of the private sector in both contributing to and managing disaster risk was never fully spelled out in the HFA. However, under Priority for Action 4, the HFA did include a key activity relating to the private sector:

(l) Promote the establishment of public-private partnerships to better engage the private sector in disaster risk reduction activities; encourage the private sector to foster a culture of disaster prevention, putting greater emphasis on, and allocating resources to, pre-disaster activities such as risk assessments and early warning systems.

Unfortunately, this activity was not included in the core indicators, meaning that its achievement has not been assessed using the HFA Monitor. From HFA progress reports, however, it has become clear that businesses, investors and insurers have not been given a clear or explicit role in the disaster risk reduction sector at the national level (UNISDR, 2013b

UNISDR. 2013b,Implementation of the Hyogo Framework for Action, Summary of Reports 2007-2013. Geneva, Switzerland: UNISDR.. .

). Very few multisector national platforms or committees have private-sector representation.

Evidence that private companies and investors do take disaster risk into account when deciding where to invest is now starting to emerge, particularly after the Japan and Thailand disasters of 2011 (UNISDR, 2013a

UNISDR. 2013a,Global Assessment Report on Disaster Risk Reduction: From Shared Risk to Shared Value: the Business Case for Disaster Risk Reduction, Geneva, Switzerland: UNISDR.. .

;

Ingirige et al., 2014

Ingirige, Bingunath, Dilanthi Amaratunga, Mohan Kumaraswamy, Champika Liyanage, Aslam Perwaiz, Peeranan Towashiraporn and Gayan Wedawatta. 2014,Private investment in Disaster Risk Management, Background Paper prepared for the 2015 Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland.
Click here to view this GAR paper.

However, at the international level, it was not until 2010 that the Private Sector Advisory Group for Disaster Risk Reduction was created11 and even more recently that initiatives to facilitate risk-sensitive business investment12 or the encoding of disaster risks in the financial sector have started to take shape.13 These and other initiatives now indicate a growing concern in the private sector that increasing disaster risk threatens the sustainability of their investments.

Although the UN General Assembly had requested a strengthening of responses to complex emergencies as early as 1999,14 the HFA provided little guidance or focus on the issue of complex and emerging risks. Just one key activity in Priority for Action 2 made reference to this topic:

(o) Research, analyse and report on long-term changes and emerging issues that might increase vulnerabilities and risks or the capacity of authorities and communities to respond to disasters.

The HFA core indicators did not make reference to emerging or long-term and complex risks, meaning that there is no clear sense of how much progress has been made in this area. In order to shape policy responses, some countries are now beginning to conduct exercises to identify emerging risks that have not been modelled ( GAR 13 paper

Kent, 2011

Kent, Randolph. 2011,Disaster risk reduction and changing dimensions and dynamics of future drivers, Background Paper prepared for the 2011 Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland: UNISDR..
Click here to view this GAR paper.

For example, the UK uses the reasonable worstcase scenario methodology to identify emerging risks and potential widespread emergencies, including nuclear crises such as the one at Fukushima Daiichi in Japan in 2011 (Government of the United Kingdom, 2011

Government of the United Kingdom. 2011,Japanese earthquake and tsunami: Implications for the UK nuclear industry, Final report. HM Chief Inspector of Nuclear Installations. Office for Nuclear Regulation. September 2011.. .

). The method was reviewed as recently as July 2014 in order to identify areas for improvement as part of the UK national risk assessment process.15 However, despite the existence of new approaches to identifying emerging risks, such processes are still in their infancy.

10.4 Planning from the future?

As risk drivers are highly connected, dealing with risk in a hazard-specific manner means disregarding much of what may not have happened yet but will surely happen in the future.

In 2011, Myanmar approved a law setting up special economic zones (SEZs) with incentives

	210 Part III - Chapter 10 Risk-sensitive business investment The role of the private sector in both contributing to and managing disaster risk was never fully spelled out in the HFA. However, under Priority for Action 4, the HFA did include a key activity relating to the private sector: (l) Promote the establishment of public-private partnerships to better engage the private sector in disaster risk reduction activities; encourage the private sector to foster a culture of disaster prevention, putting greater emphasis on, and allocating resources to, pre-disaster activities such as risk assessments and early warning systems. Unfortunately, this activity was not included in the core indicators, meaning that its achievement has not been assessed using the HFA Monitor. From HFA progress reports, however, it has become clear that businesses, investors and insurers have not been given a clear or explicit role in the disaster risk reduction sector at the national level (UNISDR, 2013b x UNISDR. 2013b,Implementation of the Hyogo Framework for Action, Summary of Reports 2007-2013. Geneva, Switzerland: UNISDR.. . ). Very few multisector national platforms or committees have private-sector representation. Evidence that private companies and investors do take disaster risk into account when deciding where to invest is now starting to emerge, particularly after the Japan and Thailand disasters of 2011 (UNISDR, 2013a x UNISDR. 2013a,Global Assessment Report on Disaster Risk Reduction: From Shared Risk to Shared Value: the Business Case for Disaster Risk Reduction, Geneva, Switzerland: UNISDR.. . ; Ingirige et al., 2014 x Ingirige, Bingunath, Dilanthi Amaratunga, Mohan Kumaraswamy, Champika Liyanage, Aslam Perwaiz, Peeranan Towashiraporn and Gayan Wedawatta. 2014,Private investment in Disaster Risk Management, Background Paper prepared for the 2015 Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland. Click here to view this GAR paper. ). However, at the international level, it was not until 2010 that the Private Sector Advisory Group for Disaster Risk Reduction was created11 and even more recently that initiatives to facilitate risk-sensitive business investment12 or the encoding of disaster risks in the financial sector have started to take shape.13 These and other initiatives now indicate a growing concern in the private sector that increasing disaster risk threatens the sustainability of their investments. Although the UN General Assembly had requested a strengthening of responses to complex emergencies as early as 1999,14 the HFA provided little guidance or focus on the issue of complex and emerging risks. Just one key activity in Priority for Action 2 made reference to this topic: (o) Research, analyse and report on long-term changes and emerging issues that might increase vulnerabilities and risks or the capacity of authorities and communities to respond to disasters. The HFA core indicators did not make reference to emerging or long-term and complex risks, meaning that there is no clear sense of how much progress has been made in this area. In order to shape policy responses, some countries are now beginning to conduct exercises to identify emerging risks that have not been modelled (Kent, 2011 x Kent, Randolph. 2011,Disaster risk reduction and changing dimensions and dynamics of future drivers, Background Paper prepared for the 2011 Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland: UNISDR.. Click here to view this GAR paper. ). For example, the UK uses the reasonable worstcase scenario methodology to identify emerging risks and potential widespread emergencies, including nuclear crises such as the one at Fukushima Daiichi in Japan in 2011 (Government of the United Kingdom, 2011 x Government of the United Kingdom. 2011,Japanese earthquake and tsunami: Implications for the UK nuclear industry, Final report. HM Chief Inspector of Nuclear Installations. Office for Nuclear Regulation. September 2011.. . ). The method was reviewed as recently as July 2014 in order to identify areas for improvement as part of the UK national risk assessment process.15 However, despite the existence of new approaches to identifying emerging risks, such processes are still in their infancy. 10.4 Planning from the future? As risk drivers are highly connected, dealing with risk in a hazard-specific manner means disregarding much of what may not have happened yet but will surely happen in the future. 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