A global strat­egy for dis­as­ter risk

Financial Mirror (Cyprus) - - FRONT PAGE -

Cur­rent dis­as­ter-risk lev­els are alarm­ing. The cost of dam­age to com­mer­cial and res­i­den­tial build­ings world­wide is av­er­ag­ing $314 bln each year, with the pri­vate sec­tor bear­ing as much as 85% of that price tag. At the same time, a new United Na­tions re­port shows that an­nual in­vest­ments in dis­as­ter­risk re­duc­tion of $6 bln can re­sult in sav­ings of up to $360 bln.

Hun­dreds of busi­ness ex­ec­u­tives, aware of the dra­matic costs – and po­ten­tial benefits – at stake, are now pre­par­ing to at­tend a UN con­fer­ence on dis­as­ter-risk re­duc­tion in Sendai, Ja­pan. A decade ago, when the last such gath­er­ing was held, the pri­vate sec­tor was scarcely rep­re­sented. This time, com­pa­nies and en­trepreneurs will be there in full force to ex­plore a range of valu­able op­por­tu­ni­ties.

The To­hoku re­gion of Ja­pan, where the meet­ing will take place, is a vivid re­minder of how a dis­as­ter’s eco­nomic im­pact re­ver­ber­ates far be­yond its epi­cen­ter. Dev­as­tated four years ago by the Great East Ja­pan Earth­quake and tsunami, Ja­pan’s au­to­mo­bile pro­duc­tion was cut by nearly half. The fi­nan­cial dam­age did not stop at the coun­try’s bor­ders; as a di­rect re­sult of the slow­down in Ja­pan, au­to­mo­bile pro­duc­tion dropped by some 20% in Thai­land, 50% in China, and 70% in In­dia.

The risks in­her­ent in glob­alised pro­duc­tion carry great re­wards for those who know how to man­age them prop­erly. That is why ma­jor busi­nesses such as Price­wa­ter­house­Coop­ers, Hin­dus­tan Con­struc­tion Cor­po­ra­tion, AbzeSo­lar, Swiss Re, AECOM, AXA Group, IBM, and oth­ers – span­ning many sec­tors and en­com­pass­ing all re­gions – are en­gag­ing with UN ex­perts to im­prove global strate­gies for dis­as­ter-risk man­age­ment and re­duc­tion.

This level of busi­ness en­gage­ment bodes well for pi­o­neer­ing a new planet-friendly and peo­ple-sen­si­tive ap­proach to global pros­per­ity. In­deed, the dis­as­ter-risk re­duc­tion con­fer­ence in Sendai is the first in a se­ries of ma­jor in­ter­na­tional gath­er­ings this year.

Be­yond Sendai, world lead­ers will con­vene in Ad­dis Ababa in July to dis­cuss fi­nanc­ing for devel­op­ment, in New York in Septem­ber to adopt a new devel­op­ment agenda, and in Paris in De­cem­ber to reach a mean­ing­ful cli­mate-change agree­ment. Taken to­gether, th­ese meet­ings prom­ise to gen­er­ate trans­for­ma­tive ac­tion that can set the world on a safer, more pros­per­ous, and more sus­tain­able path.

Sus­tain­abil­ity starts in Sendai for three ma­jor rea­sons. First, by its very na­ture, dis­as­ter-risk re­duc­tion re­quires for­ward plan­ning. Sec­ond, in­vest­ment in this area ad­vances both sus­tain­able devel­op­ment and cli­mate ac­tion. And, third, help­ing those who are most vul­ner­a­ble to dis­as­ters is the ideal start­ing point for the ef­fort to aid all peo­ple by es­tab­lish­ing uni­ver­sal tar­gets for devel­op­ment and cli­mate change.

Over the last 12 months, thou­sands of lives were saved in In­dia, the Philip­pines, and else­where by im­proved weather fore­cast­ing, early-warn­ing sys­tems, and evac­u­a­tion plans. Ad­vances in risk re­duc­tion that safe­guard devel­op­ment gains and busi­ness in­vest­ments must match this progress in dis­as­ter pre­pared­ness, and we must make wise choices that cre­ate greater op­por­tu­ni­ties in the fu­ture.

For ex­am­ple, ex­perts es­ti­mate that 60% of the land that will be ur­banised by 2030 has not yet been de­vel­oped. En­ter­prises that fac­tor dis­as­ter risk into their con­struc­tion plans will avert the much higher costs of retrofitting later. More broadly, over the next 15 years, the world will make ma­jor in­vest­ments in ur­ban in­fra­struc­ture, en­ergy, and agri­cul­ture. If this spend­ing is di­rected to­ward low­car­bon goods, tech­nolo­gies, and ser­vices, we will be on our way to cre­at­ing more re­silient so­ci­eties.

More and more in­dus­tries ap­pre­ci­ate this. At the Cli­mate Sum­mit that I con­vened last Septem­ber at the UN in New York, fi­nan­cial in­sti­tu­tions, com­mer­cial and na­tional banks, in­sur­ance com­pa­nies, and pen­sion funds vowed to mo­bilise more than $200 bln by the end of this year for ac­tion to ad­dress cli­mate change.

They en­vi­sioned a host of new ini­tia­tives, in­clud­ing is­su­ing so­called green bonds and shift­ing as­sets to clean-en­ergy port­fo­lios. In a par­tic­u­larly im­por­tant move, the in­sur­ance in­dus­try, rep­re­sent­ing $30 trln in as­sets and in­vest­ments, com­mit­ted to cre­at­ing a Cli­mate Risk In­vest­ment Frame­work for in­dus­try-wide adop­tion by the end of the year.

It is time to stop ad­dress­ing devel­op­ment and hu­man­i­tar­ian emer­gen­cies separately. Dis­as­ter-risk re­duc­tion lies at the nexus of devel­op­ment as­sis­tance, which seeks to ad­vance bet­ter living con­di­tions, and hu­man­i­tar­ian aid, which be­gins af­ter a dis­as­ter hits. Start­ing our in­ter­na­tional cal­en­dar with the Sendai meet­ing on dis­as­ter-risk re­duc­tion sends a clear sig­nal that the world is ready to in­te­grate its strate­gies.

I have seen the hu­man toll of dis­as­ters – from earth­quakes in China and Haiti to floods in Pak­istan and Bangladesh to Su­per­storm Sandy, which af­fected the Caribbean and North Amer­ica, even in­un­dat­ing the lower floors of the UN fa­cil­i­ties in New York.

When busi­ness, civil so­ci­ety, and gov­ern­ment team up to help coun­tries with­stand dis­as­ters, they save lives, boost sta­bil­ity, and cre­ate op­por­tu­ni­ties that en­able mar­kets and peo­ple alike to flour­ish.

Sus­tain­able prof­its. Sus­tain­able liveli­hoods. Sus­tain­able devel­op­ment. It all starts in Sendai.

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