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TV Panel Debate: Can We Expect The Private Sector To Protect Our Communities From The Impacts Of Disasters?

March 15, 2015

Third UN World Conference on Disaster Risk Reduction

Opening Statement of Senator Loren Legarda

TV Panel Debate: Can We Expect The Private Sector To Protect Our Communities From The Impacts Of Disasters?

15 March 2015 | Sendai, Japan

 

 

Globally, economic losses due to disasters are taking a toll on development. These losses will continue to escalate unless disaster risk reduction and management becomes integral to national development plans and business investment strategies.

 

In its Global Assessment Report (GAR) on Disaster Risk Reduction 2015, the United Nations said that economic losses from disasters are now reaching an average of US$250 billion to US$300 billion annually.[1]

 

The UN cautions that investment in infrastructure and built environment is expected to increase over the next 40 years than has occurred over the last 4 millennia. This represents a challenge for disaster risk reduction as investment decisions take into greater account opportunities for short-term profits rather than concerns for future sustainability. When more investments flow into hazard-prone areas, the value of exposed economic assets significantly increases.[2]

 

While the occurrence of some natural hazards may be inevitable, they need not turn into disasters. Their impact on our society and economy could be reduced, if not prevented, and our development gains preserved if risk reduction is done right.

 

Traditionally, private sector involvement in disaster management has focused largely on response and relief. But businesses have the potential to bring in core competencies for shaping innovative and sustainable solutions and therefore play a vital role in building resilience.

 

Our call to the private sector is to put disaster resilience at the core of their business strategies.

 

We should consider disaster risk reduction not as a cost but a wise investment. UN and World Bank studies indicated that for every dollar invested in resilience and prevention, four to seven dollars is saved in response.

 

Moreover, companies with best practices managing their risks produced earnings that were 40% less volatile, while average property loss is 20 times larger for companies with weak risk management practices.

 

The private sector can also look at how sometimes a greener approach can be a more resilient approach.

 

Green building designs significantly reduce demand for energy, water, and materials through ecologically sensitive design and maintenance practices. It can generate up to 30 percent in energy savings, reduce carbon emissions by 35 percent, reduce water use by 30-50 percent and save 50-90 percent in waste output.[3]

 

In the insurance industry, a great concern is the increased cost of insurance claims resulting from extreme natural hazards. For instance, re-insurer Munich Re experienced a 38 percent quarterly drop in profit partly due to the severe floods in Australia in 2010 to 2011, when claims exceeded US$350 million.[4]

 

Given this scenario, the industry can start developing insurance products that would promote resilience such as paying claims that encourage rebuilding homes and commercial buildings that are more energy-efficient after a loss as well as offer lower premiums for infrastructure built with disaster risk reduction measures.

 

The private sector can also engage in environmental programs that would decrease or even prevent damage and losses to communities in times of natural hazards, like Tokio Marine and Nichido Insurance Company, which undertook a mangrove reforestation project in India and Southeast Asian countries. Mangroves are great buffers during storm surges and help sequester carbon.[5]

 

It is in the best interest of the private sector to embed disaster risk reduction and management in business processes to strengthen resilience, competitiveness and sustainability. Furthermore, robust business continuity planning is part of the private sector’s corporate social responsibility.

 

Private companies should mainstream resilience in their value chain. Micro, small and medium enterprises (MSMEs) are especially encouraged to develop their BCPs because disaster impacts such as destruction of road infrastructure, bridges and local facilities have drastic effects on them.

 

The business sector is also encouraged to conduct and share risk assessment and best practices of their companies.

 

Disaster risk reduction and climate change adaptation must be closely linked to development—the kind of development that does not create new risks but promotes resilient investments.

 

Thank you.

 


[1] Global Assessment Report on Disaster Risk Reduction 2015, Making development sustainable: The future of disaster risk reduction

 

[2] Ibid.

[3] United Nations Environment Programme (UNEP) 2012

[4] GEO-5 for Business, UNEP

[5] Berkeley Lab Research Finds the Insurance Industry Paying Increasing Attention to Climate Change