Increasing Private Sector Resilience Through Risk Informed Business Practices and Investment

SENATOR LOREN LEGARDA

Message for the Top Leaders’ Forum

Increasing Private Sector Resilience Through Risk Informed Business Practices and Investment

22 November 2013 – SMX Convention Center

Foremost, I wish to extend my thanks to those who organized this forum as it offers a golden opportunity to air an appeal for business to promote disaster resilience in their operations and in the communities where they operate.

My key message is this: We do not build resilience through relief efforts. Instead, we have to lessen the need for disaster relief.

Disaster risk reduction and climate change adaptation must be closely linked to development. The business sector, which drives the engine of growth, has a role in making that happen.

Since my first term in 1998 in the Senate, my advocacy has been consistent and clear – protect our environment, adapt to climate change and mitigate its impacts. For many years now, I have called for stronger support for disaster risk reduction and resilience.

Advocating for climate change measures has never been easy.  It was an abstract term for many, until disasters, in massive scale, started to happen.  Now, people are listening.

The World Bank reports that the Philippines is the third most vulnerable country to extreme weather events and sea level rise. The same report says that storm surges are projected to affect about 14 percent of our total population and 42 percent of the coastal population. Typhoon Yolanda’s impact has exceeded these projections.

Beyond the loss of lives, disasters have massive impacts on our economy. It has been reported that economic losses from disasters have increased 18-fold since the 1970s.

It is difficult to describe the challenges our nation faces today. Immense challenges would be an understatement.

This year, we have already experienced 25 typhoons, the strongest of which, Typhoon Yolanda, mercilessly pounded the Philippines so close to the heels of the powerful 7.2 magnitude earthquake that rocked Central Visayas.

More than 4,000 have perished and millions of lives altered. The cost of damages is estimated at 12.7 Billion Pesos.

On October 15, a 7.2 magnitude earthquake in Bohol released energy reportedly equivalent to 32 Hiroshima atomic bombs. We lost 222 of our fellowmen and a number of our heritage sites, as centuries-old churches were destroyed along with homes and infrastructure. The cost of the damage was pegged at 2.3 Billion Pesos.

It would be fatal to think that the only task at hand is that of providing relief, rehabilitation and reconstruction. Obviously, after registering the single deadliest disaster in the world in 2012 with 1,901 dead, much work remains to be done in building safe and resilient communities.
In this light, I wish to share some of the findings from the 2013 Global Assessment Report on Disaster Risk Reduction, “From Shared Risk to Shared Value: the Business Case for Disaster Risk Reduction”.

The Philippines is ranked first in terms of economic losses due to disasters as it is estimated to lose more than 10% of its gross fixed capital formation (GFCF), which is the combined annual capital investment of both the public and private sectors, to earthquakes; while more than 1% of GFCF will be lost due to typhoons.

Estimates indicate that the Philippines can suffer losses of more than US$9 billion dollars if a strong earthquake were to occur.

Losses to disasters could even exceed the country’s revenues. The Philippines has been experiencing budget deficits partly due to disasters, from more than 100 billion pesos in 2000 to 300 billion pesos in 2009, resulting to increased foreign borrowings.

The report reveals that middle-income countries like the Philippines have high levels of risk because of weaker infrastructure, which affects a nation’s annual average loss to disasters—a factor important for investors.

Not all is lost however. The report acknowledged that the Philippines has shown improvements in its disaster risk reduction and management efforts, particularly through increased budget allocations. The allocation for DRR investments in the national budget has increased from 1.4% in 2009 to 2.1% in 2011.

The Senate is currently deliberating on the 2014 government budget. Under the National Expenditure Program, approximately 48 billion pesos is allocated for disaster risk and mitigation programs of various agencies of government.

While a vital component of building our nation’s resilience is a climate-sensitive and disaster risk reduction-proofed budget, I wish to stress that the heightened engagement of the business sector in DRR is crucial as well in preventing substantial business losses and economic development setbacks resulting from disasters of unprecedented scale.

As disaster risk reduction is everybody’s business, a more visible action from the business community is required.

It is not enough that businesses come up with continuity plans that will show how prepared they are and how they can swiftly spring back to operations after each disaster.

Businesses need to make plans with the general population in mind.  A massively decimated market will not allow businesses to thrive.  It is therefore in the private sector’s best interest to strengthen its support to climate action and DRR initiatives.

Support adaptation measures that help build assets and strengthen the resilience of communities.  Help finance mitigation activities and buttress adaptation measures.  The next time you build, construct with disaster reduction and resilience in mind.  Many of you here will probably be invited to help rebuild Central Visayas. When you accept the challenge, go beyond rebuilding into creating new, resilient communities.

As your elected representative and partner in the pursuit of our national goals, I am willing to listen to your voice as you propose relevant recommendations. This means considering possible policy reforms not only in strengthening your resilience as a community, but further to promoting incentives for resilience investment.

Natural hazards have no bias. It does not choose its victims.  The business sector, therefore, is called upon to conduct and share risk assessments, establish effective and efficient early warning systems and disaster plans in their respective corporations, and engage with the local leaders and communities where they operate in pursuit of a shared DRR agenda.

There will be many more typhoons that will come our way. Let us not be content in having excellent partnerships in disaster relief.  Let us strive to diminish the need for such; after all, the higher value of corporate business is not found in the monetary profit it brings nor in the wealth it creates, but in the nobility of purpose—to improve the quality of life and to build a sustainable and resilient human society.

Thank you.