Making investments in disaster resilience is not a waste of resources because it is more expensive not to have mitigation measures amidst intensifying climate change and extreme weather phenomena, according to disaster risk reduction (DRR) experts.
“The primary benefit of investing in disaster risk reduction for businesses is that it’s too costly not to invest,” said DRR consultant Timothy Colin Wilcox in a recent webinar hosted by the Asian Productivity Organization (APO).
Wilcox painted a “grim picture” for small and medium enterprises (SMEs) that do not invest in DRR, including how it can undermine their competitiveness and lead to market share loss. He also bared the following statistics:
• 40% of businesses do not reopen after a disaster
• 75% of businesses without a business continuity plan (BCP) fall three years after a disaster
• 25% of businesses close a year after a disaster
• Companies that can’t resume operations within 10 days of a disaster’s first impact are not likely to survive
He called on SMEs to invest in disaster resilience and mitigation strategies to reduce damages as well as to put in place a BCP to stay as close to normal operations as possible following a hazard or disaster.
Wilcox said DRR investment can include, among others, getting insurance, drafting a BCP, bolstering and diversifying supply chains, strengthening hard infrastructure (e.g., retrofitting to have cyclone-resistant buildings), and introducing staff welfare programs to build a resilient workforce and workplace.
There is business value to disaster resilience, with the primary reason being to protect the company’s investment, both for the short and long term. “For a lot of small business owners, their life savings have gone into their businesses and by investing in risk reduction, you are protecting that investment,” stressed Wilcox.
He added: “With climate change affecting things, we’re seeing more and more hazards and disasters in terms of more frequency and more intensity. It’s not a matter of if the disaster is going to happen but a matter of probably when, so that investment in the long term is very important.”
Investing in DRR also lowers earnings fluctuations. “A lot of small business go from month to month or week to week with their income, and with disasters, if you don’t have insurance, you don’t have access to financial resources to fall back on to reopen. By having these resilient infrastructure and resilient business you are reducing the volatility of your earnings.”
Other reasons to build disaster resilience are to reduce damages and losses and provide peace of mind to residents that they have shops open to buy essentials from when disasters hit.
Moreover, a resilient company can seize the opportunity to innovate and develop technology, products and services for DRR such as relief items and financial products, Wilcox said.
Disaster resilience is also advantageous because it bestows a positive reputation and image on the company, imbues employee confidence in the workplace, promotes faster economic recovery and enables the firm to provide post-assistance to the community, the residents of which are also its customers and employees.
Meanwhile, Shohei Matsura, a top official at the National Research Institute for Earth Science and Disaster Resilience in Japan, underscored the importance of exploring partnerships among the public sector, private sector, and academia to support disaster risk reduction initiatives in the community.
The public sector can take on the role of planning and funding for disaster recovery and preparedness, developing and enforcing DRR regulations and policies, and ensuring social safety nets are in place.
The private sector’s role can center on business continuity planning, providing physical, technological and financial resources and tools, protecting and expanding the regional economy and livelihoods, and ensuring risk-informed investments prior to disasters.
The academia’s role can focus on providing scientific data and analysis, developing technology and innovation, capacity building in DRR, and cross-sectoral engagement and field practice, said Shohei.
