Five years ago today, one of the strongest earthquakes ever recorded hit off the coast of Japan; the resulting tsunami led to over 15,000 deaths and waves that traveled up to six miles inland. It is events like this that are making local and state/provincial governments increasingly focus on the resilience of their infrastructures, economies and societies so that they can better mitigate the impacts of climate change and natural disasters. Likewise, far-sighted businesses are also seeking to identify and manage risks to their supply chains and operations. But these efforts have tended to be separate and parallel, missing a deep potential symbiosis available, ready to be exploited.
Businesses make up something that matters dearly to any city or state government: their economies. If businesses are not adequately shielded from disasters, the economy—and therewith tax revenues and even electoral prospects—may take many years to recover, if they ever do (the population of New Orleans is still only half what it was prior to Hurricane Katina, for example). Equally, governments provide infrastructure and services that matter no less dearly to any business. Unfortunately, however, the two sectors rarely acknowledge their interdependence in achieving disaster resilience, meaning that neither is as effective as they could be.
Businesses depend on government
Obviously, businesses depend on governments to keep services running. The impact on New Orleans of the deficient response to hurricane Katrina is well known: over half the insured losses were from loss of business. In the Tōhoku region of Japan, the time it takes for reconstruction has hindered economic recovery—roads are still being repaired, and new power and phone lines have yet to go up in some areas. Similarly, the 2010 floods in Bangkok, Thailand cost companies like Toyota, Honda, Intel and Western Digital billions of dollars, damage significantly worsened by blocked storm drains and levees which had been stolen for building material. Even in cases where a business’s facilities and supply chain are protected, it’s not much help if the workforce cannot get to work in the aftermath of a disaster because residential areas have not been helped.
Beyond immediate dependency, governments can help and encourage businesses (especially small and medium sized businesses who may not have the required resources or knowledge) take steps to make themselves more resilient. For example:
- Governments have access to data and projections of risk that are unknown or unavailable to businesses: flood maps, shaking hazard maps for earthquakes, projections of some impact of climate change. Governments can communicate these hazards to businesses and encourage them to create continuity plans.
- Going further, governments (perhaps working with the local chamber of commerce and universities) can create pro-forma continuity plans and even help businesses complete them. They could also review these plans collectively and help correct erroneous assumptions.
- Businesses may need help or encouragement—i.e., carrots in the form of tax or price incentives, or sticks in the form of laws or regulations—to invest in resilience, for instance in structural changes to buildings and facilities.
Over time, one might expect insurance costs and bond ratings or risk premiums to be reduced for businesses in cities that are better prepared and more resilient, compared with cities that are not. Cities may in fact come to compete for inbound investment on the strength of their resilience and disaster preparations, just as they might compete today on the strength of their transportation links or education systems. Resilience is in effect a service that businesses require in order to function, and the more effort and imagination governments put into how it is provided, the better it will be for the economies and societies that they manage.
Governments need to collaborate with businesses
The relationship goes both ways. Just as businesses require help from government to become more resilient, government can benefit from what businesses have to offer. First and most obviously, key infrastructure systems such as communications, energy, transportation or healthcare may be in private ownership, and the continuity plans of the companies that operate these items need to be carefully assessed for completeness and mutual compatibility. Beyond that, there are a number of other areas where businesses can help:
- Businesses can offer a conduit—a communication channel—to their workforces for education about potential hazards and required responses. This would be a relatively efficient way to reach large groups of citizens, while maximizing the likelihood for the business itself that its workforce will have taken care of their families and homes and thus be able to resume work after some event.
- Businesses talk to other businesses, so working with some businesses to build awareness of risk and the required response may lead to the word spreading further and faster.
- Businesses have facilities or equipment governments can use in the event of a disaster. Examples might include warehouse space, trucks, earthmoving equipment, data center space or emergency office space. Japan is one country that does this quite extensively, but it is relatively rare elsewhere.
- Businesses can publicize and share their continuity plans to check that their assumptions are compatible with government plans for emergency response and detect potential bottlenecks—for example, competing back-up transportation routes or warehousing.
- Larger businesses can act as conveners for the many agencies important to the resilience of an area. The U.S. Navy is seeking to do this in the areas around its installations, recognizing that hardening the installations alone without addressing the needs of the surrounding communities will not enable the facilities to continue functioning.
- Larger businesses may also have specific skills such as risk assessment, project management or engineering that might be required to complete and execute resilience plans; these could be loaned to the cities and agencies that lack them.
In some cities, business organizations and local governments have come together to plan disaster resilience programs, and it is possible to see collaborative, indeed symbiotic, relationships evolving along the lines discussed here. But in far too many cities, this dialogue has yet to begin. At a time when 100-year events are seemingly becoming 10-year events, that as an omission that few cities can afford. To find out more about how to get involved in making your city more resilient, see the United Nation’s Office for Disaster Risk Reduction homepage here; to ascertain how ready your city/business may be for disaster, see the United Nation’s Disaster Resilience Scorecard here.
Photo credit: Michelle Cullen/IBM