Making the business case for urban resilience

2013 saw the publication of the third edition of the UNISDR’s Global Assessment Report (GAR) on disaster risk reduction, ‘From Shared Risk to Shared Value: the Business Case for Disaster Risk Reduction’. Once again this has highlighted the importance of the private sector and appropriate risk assessment in DRR. The report highlights that in the future the increasing cost of disaster is going to fall no the private sector, and yet at present this relationship is poorly understood. In terms of the business case it notes:

In today’s global economic and political turmoil, rapid technological change and increasing inter­connectedness of global trade, financial markets and supply chains, larger businesses perceive a riskier world. For the private sector, this means an array of complex, unpredictable events and sud­den change in which risks can manifest swiftly and unexpectedly, with far-reaching ramifica­tions. Within this landscape, the reduction of disaster risks is taking on new significance and urgency for all global players. Investments in disaster risk management are increasingly being seen less as a cost and more of an opportunity to strengthen re­silience, competitiveness and sustainability. (p.4)

Although the focus of this report is on DRR its underpinning ideas have much relevance across a range of other urban resilience areas.  This is especially the case in nations impacted significantly by the on-going global economic downturn where, in an age of fiscal retrenchment and attempting to do ‘more for less’, the finances for resiliency measures are under strain with the need for attractive ‘business cases’ becoming ever more important.  But how might an improved business case be presented?

One way is to argue that resiliency measures will have more than one function – to be of dual use. For example, can the structural robustness required for counter-terrorism interventions also help reduce crime? Can they de designed in such a way as they might aid flood prevention (by also acting as a sustainable urban drain)? And could they provide a promotional benefit for a site wishing to market itself as ‘safe and secure?

A second way is to utilise the mechanism of insurance. Can, for example, communities or developers in a flood prone area obtain a reduction in premium for putting in place flood mitigation measures that will limit the exposure of the insurance industry. To date such a ‘sweetener’ has seldom been forthcoming to cover such risk (unless through specialised syndicates), and indeed the industry is often keen to distance itself from such risks as they evade the normal rules of insurance in terms of predictable occurrences and impact (liability).

A third possibility is to rely on the corporate social responsibility ethos of the private sector to deliver on resiliency efforts, although this is fraught with pitfalls and often lacks transparency.

The aforementioned approaches, and others, are ‘carrot’ approaches – attempting to encourage the business sector to engage with the collective resiliency effort. The alternative and less well tried method is the ‘stick’ approach, which will regulate and legislate so as to ‘encourage’ (i.e. insist) the private sector plays its part. Most developed economies however have a phobia about additional red tape and thus this is an approach which, despite calls from many, has so far been largely ignored. Some guidance has been forthcoming but this is not obligatory.

For example, in the recently released UK National Planning Policy Framework (DCLG, 2012), it is articulated that Local Planning Authorities should ‘work with local advisors and others to ensure that they have and take into account the most up-to-date information about higher risk sites in their area for malicious threats and natural hazards, including steps that can be taken to reduce vulnerability and increase resilience’ (emphasis added).

Constructing a good business case for resilience might however be mutually beneficial for the public and private sector alike. As the UNISDR 2013 GAR report (p.5) notes:

 … if business becomes more risk-sensitive, governments will be encouraged to in­vest more heavily in disaster risk reduction. Effec­tive disaster risk management will become a basic requirement for competitive countries and cities that are successful in attracting business invest­ment. Growing convergence of public and private initia­tives to model and estimate disaster risks is begin­ning to underpin these efforts. Disaster risk man­agement platforms and applications are now being developed to allow businesses to incorpo­rate these data into their investment decisions. Accurate risk data, in turn, facilitate the develop­ment of insurance markets, with appropriate pric­ing that encourages risk-sensitive investment (p.5).

The above approach, emphasising what we might consider to be a more ethical approach, does rely on a change in corporate culture. As one delegate from the Philippines at the Resilient Cities conference in Bonn in June 2013 noted with regard to the UNISDR approach ‘the higher value of corporate business is not found in the monetary profit it brings neither in the wealth it creates, but in the nobility of purpose – to improve the quality of life of the people and to build a sustainable and resilient human society’.

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1 Response to Making the business case for urban resilience

  1. Shaz Jameson says:

    Thank you for this interesting post. The next question is, obviously, how to change the corporate culture?

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