International Journal of Disaster Risk Reduction ()

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International Journal of Disaster Risk Reduction

journal homepage: www.elsevier.com/locate/ijdrr

Editorial

Special issue: Risking disaster The role of private investment and

public regulation in disaster risk management

(in cooperation with the Global Assessment Report on Disaster Risk Reduction/United Nations Ofce for Disaster Risk
Reduction)
The risk of economic loss due to oods, earthquakes, cyclones
and tsunamis is steadily on the rise. Why? Put simply, because we
continue to invest in hazard-prone regions at an accelerated rate.
In the coming decades, trillions of dollars in new investments will
ow into the productive sectors and built environments of low and
middle income countries throughout the world. How and where
these investments are made will heavily inuence the future of
disaster risk. Our contemporary physical landscapes, built environments, and the disaster risks they internalise, are reections
of how such investments have been made over the last 40 years or
so.
Public investment typically represents 1530% of the total investment in any given country (UNISDR, 2013), providing critical
infrastructure and services for the economy as a whole, as well as
marginal populations and small to medium enterprises in particular. However, the way that disaster risk has been etched into
today's landscapes continues to be fundamentally shaped by private investment. Therefore, whether or not enacted regulations
and incentives are successful in ensuring risk-sensitive investment
will greatly determine if future prosperity for whole industries and
economies in hazard-prone regions is even possible.
And yet, our understanding of the dynamic relationship between public regulation, private investment and business operations, and disaster risk is limited. Recognising this gap, the 2013
edition of the United Nations Global Assessment Report on Disaster Risk Reduction (GAR13) focused on private investment and
how businesses, insurers and investors and their relationship
with the public sector drive, shape and potentially reduce disaster risk. The analysis put forward in GAR13 and in this Special
Issue, together with further data, case studies and papers published as part of the Report, presents a signicant body of
knowledge and new evidence that will be critical in dening the
future role of the private sector in managing disaster risk.
The example of Denarau, Fiji given by Bernard and Cook, puts
the spotlight on how small countries with limited economic diversication are under pressure to compete for investments at the
cost of their citizen's safety and their countries economic sustainability. But even larger more diversied economies succumb to
pressures to attract investment, foreign direct investment (FDI) in
particular. However, the steady increase in economic losses associated with recurrent physical hazards such as oods and cyclones
can have a negative impact on FDI ows. Anuchitworawong and
http://dx.doi.org/10.1016/j.ijdrr.2014.09.010
2212-4209/& 2015 Published by Elsevier Ltd.

Thampanishvong show how, in the case of Thailand, high severity

events such as the 2011 Bangkok oods can directly impact not
only business performance nationally and internationally, but also
FDI ows into a country.
Thus, the sense of competitiveness achieved as a result of new
investment may be but illusory short-term gain in the case of
many countries highly exposed to hazards. While the economic
growth and increased productivity may generate employment, tax
revenue, and investment in public infrastructure and services, in
the long run, existing risks are exacerbated with the generation of
new social and environmental risks, as well as associated costs.
Generally, these costs are born by the public, either via the state or
directly by vulnerable households and communities, as well as
small and medium-sized businesses. In this sense, countries and
societies are owners of a stock of risk, a pile of toxic assets that do
not usually appear on any company or government department's
balance sheet (UNISDR, 2013).
As such, there is a critical interdependence between business
and the public sector. If public infrastructure is vulnerable, business is also at risk. Examples from Delhi, India presented by Jain
show how large scale investments in infrastructure are made
within a context of insufcient regulatory processes, with the result that new urban development increases exposure and generates new risks for people, property assets and local economies.
Business directly suffers from this. Sarmiento and Hoberman present striking ndings from their survey of more than 1000 small,
medium-sized and large businesses across 6 cities in the Americas.
They show that small businesses in particular are not only unprepared for disaster risks, but also lack the capacity to assess the
risks to their immediate operations, and to ensure business continuity should disaster occur.
Businesses are also becoming more and more concerned with
disaster-induced direct and indirect losses in their supply chains,
along with the fall in output, revenue, and protability that this
has entailed. But business interruption is not only a consequence
of these losses, but also wider macroeconomic processes as global
trade, nancial markets and supply chains have become increasingly interconnected. When a local disaster occurs in a globally
integrated economy, the impacts ripple throughout regional and
global supply chains, causing indirect losses to businesses on the
other side of the globe. Returning to the case of Thailand, Haraguchi and Lall examine the impact that the 2011 oods had on the
automotive and electronics production industries and their supply
chains two of the industries most affected by the global rippleeffects caused by interruptions in parts production and supply to

Editorial / International Journal of Disaster Risk Reduction ()

major production centres in China, India, Japan and the US. Despite
heavy losses, the outskirts of Bangkok remain an attractive location for many businesses in these sectors as other considerations
such as labour markets, procurement and tax regulations are
weighed. And so the risks remain.
With today's global economic and political turmoil, rapid
technological change and the increasing interconnectedness of
global trade, nancial markets and supply chains, larger businesses perceive an increasingly riskier world. For business, this
means a reality lled with an array of complex, unpredictable
events, and the likelihood of sudden change, in which risks can
manifest swiftly and unexpectedly, with far-reaching ramications. Within this landscape, the reduction of disaster risks is
taking on new signicance and urgency for all global players. Investments in disaster risk management need to be seen less as a
cost and more as an opportunity to strengthen resilience, competitiveness and sustainability. Public-private partnerships that
build on this notion of opportunity can become a cornerstone for
future effective disaster risk management.
Sudmeier-Rieux and colleagues show how pressures on fragile
ecosystems and critical natural resource bases often driven by
public and private investments, and the disaster risks this generates, can be alleviated through risk-sensitive land use planning.
Examples that are diverse yet similar in their dynamics from Nepal, Spain and Vietnam highlight how land pressure that creates
new exposure and vulnerabilities can be reduced through costeffective and prospective measures in partnership with the private
sector.
There are further examples of effective resilience building and
mutual benet from sectors such as urban planning and water and
sanitation that point to a way forward. Carpenter shows how, in
the context of the Mississippi Gulf Coast, physical urban space can
shape social space and facilitate the building of social capital,
which in turn creates stronger capacities to withstand shock.
There is also need for the systematic study of the political economy of disaster risk creation, and how incentives for effective
disaster risk management can be established. Johanessen and

colleagues present evidence from the water and sanitation sector

that point to the need for new approaches that tie the creation of
social space to the sustainable use of existing ecosystem services.
Finally, Hamdan suggests that existing tools for institutional analysis can be combined with prescriptive risk governance frameworks to assess and better understand disaster risk management
decision-making at various levels.
The relationship between investment decisions and public
regulation continues to be a dynamic and at times fraught one.
Investment decisions continue to drive disaster risk creation
across the globe, and as a consequence, disasters now pose a
growing systemic threat, not only to the private sector itself, but to
the cities, countries and societies that depend on healthy economies for their welfare. The divergent trajectories of the relentless
pursuit of prot and economic growth on the one hand, and the
global, national and local efforts to more effectively manage disaster risk, on the other, have to be more closely aligned in the
future. Opportunities to bridge the gap abound as we approach the
year 2015. New international frameworks on disaster risk reduction, sustainable development, and climate change mitigation and
adaptation are being developed as this is being written, and with
them, new opportunities for private investors, businesses, governments and consumers, i.e. citizens, to re-set the parameters
that dene and shape our values and our measures of progress and
prosperity.

Coordinator Policy & Research

Dr. Bina Desai n
Risk Knowledge Section, United Nations - International Strategy for
Disaster Reduction, Geneva
E-mail address: desaib@un.org

Dr. Juan Pablo Sarmiento

Director, Paul C. Bell Disaster Risk Management Program Latin
American and Caribbean Center, Florida International University, USA

Corresponding author.