Business continuity planning vital for disaster-prone Manila

MANILA, 4 May: UNISDR joined forces with a leading university yesterday to urge Manila’s business community to reduce its disaster risk and to develop business continuity plans which take account of the capital city’s extreme exposure to earthquakes and typhoons. Disasters cost the country a record $615 million last year.

“Adopting business continuity plans is not a question of choice but a double imperative for the Philippines as earthquake and typhoon risks are very high and seriously threaten business assets and profits”, Margareta Wahlström, the UN Secretary-General’s Special Representative for Disaster Risk Reduction told more than 100 participants at a roundtable on business continuity planning (BCP) held in Ateneo Graduate School of Business in Manila.

“Corporations need to start thinking about what they can do to better protect their businesses against disasters as they are already paying a very high cost for not doing so,” warned Wahlström.

“The private sector plays an instrumental role in mitigating the collective risks we face as people”, said Father Jett Villarin, President of the Ateneo De Manila University, “and BCP should be also taught in business schools to sustain the dialogue and practice among business entities.”

According to a study by the Japanese International Cooperation Agency (JICA), “The Metro Manila Earthquake Impact Reduction Study”, a 7.2 magnitude earthquake in the West Valley Fault will damage 40 percent of the total number of residential buildings within Metropolitan Manila, which has 11.8 million inhabitants, and will cause approximately 34,000 deaths and 114,000 injuries. Moreover, fire spreading as a secondary effect of the earthquake will cause an additional 18,000 deaths.

The Philippine Institute of Volcanology and Seismology has noted that such an event happening is inevitable.

In 2011, disaster losses rose to 26 billion pesos (US$615 Million) in the Philippines exceeding the previous record of 14.5 Billion pesos in 2006.

Manila which accounts for more than 33 per cent of the GDP in the Philippines has been hit by 30 earthquakes since 1900. The Valley Fault System that runs north to south along the west and east edges of the Marikina Valley is thought to pose the greatest seismic threat to Metro Manila due to its close proximity.

Manila and the Philippines also suffer from more than 30 typhoons per year. Tropical Storm Ondoy and Typhoon Pepeng in 2009 have already caused substantial damages and losses, equivalent to about 2.7 percent of GDP. Climate change experts predict that typhoons, storms and flash floods will be even more frequent and severe in the future.

“In addition to these first hand risks, the Philippines is also exposed to other threats due to the interconnectedness of today’s disasters. A disaster happening in Japan or somewhere else in Asia can have also great repercussions in the Philippines affecting different manufacturing activities and employment sectors,” noted Wahlström.

The Great East Japan Earthquake in 2011, for example, resulted in a 10-25 percent decrease in the automobile production with a domino effect of a 10-20 percent reduction in the manufacturing of electrical components in the Philippines.

“Yet despite the magnitude of potential costs and loss of incomes, reducing disaster risk continues to be perceived as a lesser priority than fiscal stability, unemployment or inflation when it should be a priority as disasters continue to increase and inflict huge economic losses to businesses,” said the UN head for Disaster Risk reduction.

Senator Loren Legarda who is a UNISDR Regional Disaster Risk Reduction Champion took the opportunity of the visit by Wahlström to convene a high-level meeting of business leaders to convince them that robust business continuity planning was part of their corporate social responsibility. Those business leaders included Rhicke Jennings, President of the American Chamber of Commerce, Henry Limbonliong, Vice-President of the Filipino-Chinese Chamber of Commerce and M. Hans Sy of SM Prime Holdings.

According to a recent survey carried out by the Japanese government on the adoption of business continuity planning (BCP) by member countries of the Asia-Pacific Economic Cooperation (APEC), just after the APEC meeting last November in Honolulu, only nine out of the 40 Philippines companies which responded to the survey had a BCP in place while three others were in the process of developing one.