U.N. Warns of Escalating Economic Losses from Disasters, And DRI Is Taking Action to Help!

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The United Nations Office for Disaster Risk announced yesterday that the Global Assessment Report on Disaster Risk Reduction – the UN flagship publication on global disaster risk and disaster risk management – has been launched. Economic losses from disasters since 2000 are in the range of $2.5 trillion, a figure at least 50 percent higher than previous international estimates, according to the report.

The third edition of this biennial publication, titled “From Shared Risk to Shared Value: the Business Case for Disaster Risk Reduction,” highlights how the transformation of the global economy over the last 40 years has led to rapid increases in disaster risk in low, medium and high income countries, affecting businesses and societies. The U.N. Office for Disaster Risk Reduction warned in the 246-page report that economic losses from floods, earthquakes and drought will continue to escalate unless businesses take action to reduce their exposure to disaster risks.

U.N. Secretary-General Ban Ki-moon said “economic losses from disasters are out of control” and can only be reduced in partnership with the private sector. “Our startling finding is that direct losses from floods, earthquakes and drought have been underestimated by at least 50 percent,” Ban said. “So far this century, direct losses from disasters are in the range of $2.5 trillion. This is unacceptable when we have the knowledge to reduce the losses and benefit from the gains.”

“As an international organization that deals with preparedness on a daily basis, DRI International is heavily invested in global preparedness. DRI International’s mission statement is ‘to make the world more prepared,'” said DRI President Al Berman. “It’s really important, and it’s a long-term project. There needs to be some means by which a regional process is created so that the haves can help the have nots.  We’re working with a number of Asian and Latin American countries and governments on standards right now. As we learned in the Great Eastern Earthquake on 3/11 in Japan, these incidents can and did have a real negative effect on businesses in other countries, including the U.S. We’re also working in the Gulf region on a standard there so that they have a unified approach to dealing with disasters. We’re working toward something that eventually all countries in the region will buy into. And we’re working in Latin America, where natural disasters, like mud slides in Brazil, are a huge issue.”

“Incidents are inevitable. Disasters are man-made.  Both the public and private sector have a duty to provide a reasonable standard of care to prevent disasters from occurring. I applaud the U.N. Office for Disaster Risk Reduction for their effort to lead at the international level,” added DRI Director of Global Operations Chloe Demrovsky.

“In the years ahead, trillions of dollars will be invested in hazard-exposed regions,” Ban said. “If that money fails to account for natural hazards and vulnerabilities, risk will increase. Where such spending does address underlying risk factors, risk will go down.”

According to the AP, the report said recent major disasters such as Hurricane Sandy in 2012, the 2011 floods in Thailand and the 2011 Japanese earthquake and tsunami put a spotlight on the growing impact of disasters on the private sector. The report says increasing globalization, the search for lower costs and higher productivity, and quick delivery “are driving business into hazard-prone locations with little or no consideration of the consequences on global supply chains.”

For example, it said Toyota lost $1.2 billion in product revenue from the Japanese quake due to parts shortages that caused 150,000 fewer cars to be manufactured in the United States and a 70 percent reduction in production in India and a 50 percent reduction in China.

On the other hand, Orion, which owns and operates one of the largest electricity distribution networks in New Zealand, invested $6 million in seismic protection that saved the company $65 million in the 2010 and 2011 earthquakes, the report said. And preventive investments by fishermen in Mexico saved each individual entrepreneur US$35,000 during Hurricane Wilma in 2005, it said.

To read the report, listen to interviews, and access other informative and interesting supporting material, click here.

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