Private sector hardest hit by losses after disasters shows United Nations research
During the 2011 Thailand floods the private sector suffered 94 per cent of the colossal US $44 billion of economic losses. New research from the United Nations in Asia-Pacific shows that this situation is not unusual, with Small and Medium Enterprises (SMEs), which make up 90 per cent of the private sector in Asia-Pacific, being particularly vulnerable to natural disasters. As a result, business resilience is essential to societal resilience.
The heavy losses mean that businesses and governments must build stronger partnerships and deeper engagement in managing disaster risks and impacts, Dr. Shamshad Akhtar, Executive Secretary of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), told a session of the Third World Conference on Disaster Risk Reduction in Sendai, Japan.
“The public and private sectors should assume joint responsibility to properly assess and share risks, while mainstreaming and integrating disaster resilience into their DNA in such a way that they reinforce each other in design and structuring of risk mitigation”, said Dr. Akhtar. “For the post-2015 Disaster Risk Reduction Framework to work, it needs to be supported by adequate and innovative risk financing mechanisms. Public-private partnerships will be essential”, she added.
Advancing these arguments, ESCAP has released a new publication, Resilient Business for Resilient Nations and Communities, in partnership with the Asian Disaster Preparedness Center (ADPC), and R3ADY Asia-Pacific. The report details options for governments and businesses to work in partnerships towards common resilience through supporting business continuity for value chains, undertaking more risk-sensitive investment and providing incentives for resilience projects.
The report also stresses that although SMEs often employ over half the workforce and generate between 20 and 50 per cent of GDP, they are the least prepared to bounce back from disasters. As such, this sector should be offered special support to address disaster risks more effectively.
Further detailed is the need to recognize that businesses should be held accountable for their own share of risk creation, both by governments through adequately enforced legal and regulatory systems, and by society at large. On the other hand governments are responsible for creating an enabling environment for businesses to invest in disaster risk management.