Disaster expert warns of future devastating Asia losses

Asia, including the Philippines, will continue to bear the brunt of devastating economic losses from disasters unless the region’s private sector makes disaster risk management a core part of business investment strategies, a UN expert warned last week.

With trillions of dollars of new business investment set to pour into the thriving, but often hazard-exposed, coasts and cities of Asia over the coming years the private sector’s investment decisions will determine how safe and resilient the region will be, said Andrew Maskrey at the regional launch of the 2013 Global Assessment Report on Disaster Risk Reduction in Bangkok.

‘‘We are saying that the worst is yet to come because, in any given part of the world, most of the disasters that could possibly happen have not yet happened. In addition, our exposure, particularly here in Asia is increasing,’’ said Mr Maskrey, the Lead Author of the Report from the UN Office for Disaster Risk Reduction (UNISDR).

‘’More economic assets, more population in hazard prone areas means more risk and bigger disasters.’’

The Report, entitled ‘Creating Shared Value: the Business Case for Disaster Risk Reduction’, says the private sector has an enormous opportunity to turn the tide of escalating disaster losses. Better disaster risk management reduces uncertainty, builds confidence, cuts costs and creates value for business.

Without such a shift, the Report predicts disaster losses on an even more frightening scale. It estimates annual average direct losses from earthquakes at more than USD100 billion globally, of which 76 per cent will be in Asia. Meanwhile, cyclonic winds will cause estimated annual average direct losses of USD89 billion, of which 80 per cent will be in Asia.

In terms of extreme scenarios, the biggest absolute losses are also expected to be in Asia: A once-in-250-years earthquake would cause more than USD100 billion in economic losses for Japan and the equivalent for the Philippines would wipe out 20 per cent of urban capital.

The Report highlights that many critical facilities are in areas exposed to destructive tsunamis. In the wake of the Fukushima nuclear disaster, there are still 10 nuclear plants in Japan exposed and another 12 in China. In terms of airports, Japan has 40 exposed to potential tsunamis.
And once business is hit, it may leave for good. Prior to the 1995 earthquake, Kobe, in Japan, was the world’s sixth busiest port. Despite a rapid USD163 billion reconstruction and several incentives to attract business to return, Kobe fell to 47^th busiest in the world by 2010.

The Report analyses three key global investment sectors – urban development, coastal tourism, and agribusiness – and reveals that prevailing business models in each are continuing to drive disaster risk.

Yet, the private sector, governments and respected forecasters and business analysts continue to side-step the issue of disaster risk.
‘’It’s time for business to come in from the cold on this issue and as they become more risk sensitive and choose places not only for the lower risks but because these locations can manage those risks very well, it will then encourage countries to start investing more in risk management,’ Mr Maskrey said.

Consultations are now under way in earnest to build a new global agreement on disaster risk reduction to replace the current Hyogo Framework in 2015. One of the keys to success of a future global strategy will be the choices the private sector makes in terms of how it allocates its trillions of dollars of investment in Asia over the coming decades.

By the United Nations Office for Disaster Risk Reduction (UNISDR)

Photo by Imelda V. Abano