The United Nations today issued a stark warning to the world's business community that economic losses from disasters are "out of control" and will continue to escalate unless disaster risk management becomes a core part of business investment strategies.
UN Secretary-General Ban Ki-moon said: "Governments bear the responsibility for disaster risk reduction. But the level of risk is also related to the where and the how of investment by the private sector, which is responsible for 70 to 85% of worldwide investment in new buildings, industry and critical infrastructure."
He continued: "We have carried out a review of disaster losses in 56 countries. Our startling finding is that direct losses from floods, earthquakes and drought have been underestimated by at least 50%. 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.
"Let us not shy away from the meaning of these numbers: Economic losses from disasters are out of control. They can only be reduced in partnership with the private sector, including investment banks and insurance companies. For too long, markets have placed greater value on short-term returns than on sustainability and resilience. At long last, we are coming to understand that reducing exposure to disaster risk is not a cost but an opportunity to make that investment more attractive in the long-term."
The UN Secretary-General was speaking today as he launched a ground-breaking report from the UN Office for Disaster Risk Reduction (UNISDR) which is built on important new data sets including reviews of national disaster loss databases, survey responses from 1,300 SMEs in disaster-prone locations in the Americas, and a review of risk management in 14 major corporations including ABB, ARUP, BG Group, Citigroup, General Electric, HCC Group, HIRCO Group, Hitachi Group, InterContinental Hotels Group, Nestlé, NTT East Corporation, Roche, Shapoorhi Pallonji&Co. Ltd., and Walmart.
The UNISDR 2013 Global Assessment Report on Disaster Risk Reduction (GAR13): Creating 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.