Disasters now key in multinational country assessments
Date: 12 Dec 2011
Source(s): United Nations Office for Disaster Risk Reduction (UNISDR)
GENEVA, 12 December 2011 - Disaster risk is now a key factor influencing the way corporations look at living standards, particularly when structuring compensation packages for expatriate employees.
According to Slagin Parakatil, a Senior Researcher at Mercer, “Companies need to keep on top of current developments to ensure that their compensation packages remain competitive and continue to motivate expatriate employees.” This means reviewing major events, such as social unrest, economic turmoil or disasters and their impact on overseas placements.
Mercer conducts annual surveys to help governments and companies compensate employees adequately when placing them. A recent survey states that although a number of South and Central American countries have experienced positive change, political and safety issues predominate in the region. Drug trafficking and high levels of street crime, combined with natural disasters, continue to impair the quality of life.
Asia-Pacific countries such as Australia, New Zealand and Singapore are well represented among the top tier of both Mercer’s general and personal safety rankings, partly because of continuous investment in infrastructure and public services. “Nevertheless, many Asian cities rank at the bottom, mainly due to social instability, political turmoil, natural disasters such as typhoons, tsunamis, and lack of suitable infrastructure for expatriates,” noted Parakatil.
Helena Molin Valdes, Director a.i. of the UN disaster risk reduction office (UNISDR) sees awareness of disaster risks as the first step towards protection and prevention. But as Coordinator of UNISDR’s World Disaster Reduction Campaign (2010-2015) - Making Cities Resilient: "My city is getting ready", she believes that multinationals and local private sector companies can do even more.
“While mayors and local governments drive the Campaign, taking their cue from the Hyogo Framework for Action (2005-2015) which provides them with solutions to reduce disaster risks, DRR is really everyone’s business. Now is the time for multinationals and local private sector concerns to step up and get engaged”, states Molin Valdes.
The advice seems to be taking root albeit slowly. Makati City is a UNISDR Campaign city and a financial hub in the Philippines which received the highest award in 2009 and 2010 from the national government for disaster resilience. Violeta Seva, a Senior Advisor in the Mayor of Makati’s Office states: “Together with the private sector, we’ve embarked on a preparedness programme for those that are staying in the financial district. Every year, they hold earthquake drills and fire drills within the central business district, to prepare the office workers and the residents in the event of any emergencies, so they know what to do.”
Earlier this Month, Munich Re announced that it is discussing disaster schemes with governments all over Asia. One area of focus is driving the discussion in greatly exposed economies to structure country-wide solutions; the other is finding solutions for infrastructure such as roads and bridges.
Munich Re estimates that worldwide economic losses from disasters in 2011 amount to US$ 310bn for the first nine months alone, making it the costliest year ever. Over the last 30 years, Asia Pacific has experienced more than 50% of all fatalities from disasters, almost 40% of all economic losses but less than 9% of the insured losses.
According to the global reinsurer, this shows the need for wider insurance coverage. This can be met through a variety of measures, from traditional insurance and reinsurance, to public-private partnerships or pooling of natural catastrophe risks nationwide.
“Such public-private partnership solutions can provide durable economic stability to societies and government budgets by offering significant financial relief when disaster hits […] and help with risk prevention and post-disaster management”, commented Ludger Arnoldussen, member of Munich Re’s Board of Management.
More often than not, such public - private partnerships can be described as being in a courting phase. As Janet Edwards, an International Coordinator for the Swedish National Platform for Disaster Risk Reduction observes, although there is some cooperation on research for a DRR inventory in Sweden, “I think it’s going to take a little bit of time, perhaps a year.” But she believes that by the next Global Platform in 2013 “we could have the private sector involved in [the] Making Cities Resilient [Campaign].”