Launched in tandem with the new Global Assessment Report on Disaster Risk Reduction (dubbed GAR13) from The United Nations Office for Disaster Risk Reduction, the report marks an initiative led by UNISDR and consultancy PwC to link private sector businesses of all sizes in disaster planning, which is intended to answer the UN’s call for more action from the private sector on disaster reduction.
The report warns that large multinationals’ dependencies on international supply chains, infrastructure and markets poses a systemic risk to “business as usual”.
Called Working together to reduce disaster risk, the UNISDR/PwC report examines the disaster risk management approaches and experiences of 14 multinational companies, including Nestle, Walmart, General Electric, Citigroup and BG Group.
The businesses taking part undertook a pilot assessment of their risk management activities. The pilot showed that while good practices existed for disaster risk reduction for corporate-owned assets, the level of understanding and ability to manage risks in local supply chains was far lower.
PwC said the private sector increasingly feels the indirect impacts of natural disasters amplifying losses globally, for example through commodity price rises, supply chain disruption, workforce dislocation, asset damage, and lost or damaged infrastructure.
The report highlights how even businesses with established risk management systems in place need to do more to protect themselves fully against natural disasters. Meanwhile, small and more vulnerable enterprises in developing economies lack the capacity to strengthen their risk management and overall supply chain resilience alone.
A the other end of the scale, global businesses need to consider risks shared with their suppliers, SMEs and local businesses in their supply chain, particularly in developing and emerging economies, where disproportionate economic and human impacts of disasters are being felt.
The report said that few global corporations collaborate actively with governments across countries in which they operate, adding pointedly that some large businesses rely on the insurance industry alone for risk assessments, with most having only limited access to disaster risk information on which to base their investment decisions.
Now PwC and UNISDR are going to work together to develop a collaborative framework and methodology for private sector disaster management. The project will address some fundamental questions, such as what legislation and policies the public sector has to come up with to create the right incentives for the private sector to share and implement its disaster risk management know-how.
Speaking at the launch Celine Herweijer, a partner in PwC’s global sustainability and climate change practice and a leading authority on climate change and development, said that the insurance industry has a role to play.
“The amount of risk information, location specific risk information that re/insurers and brokers have could be incredibly useful for corporations to have access to and incorporate into their ERM responses…governments and city planners would also benefit from access to such data as well,” she said.