International Strategy for Disaster Reduction
 
Statement of Commitment by the Private Sector for Disaster
Prevention, Resilience and Risk Reduction
Preamble

Major disasters triggered by natural hazards impact the lives and livelihoods of millions
of people around the world, both in developed and developing countries. While the
devastating earthquake in Haiti and floods in Pakistan in 2010 highlighted the
vulnerability of poverty stricken nations to natural hazards, the 2011 floods in Australia,
earthquake in New Zealand, and earthquake and tsunami in Japan showed wealthy
nations are not immune to disaster risks.

Across the globe the economic and insured losses from these events are rapidly rising in
line with the frequency and severity of major natural catastrophes. This is due in part to a
combination of rapid simultaneous global economic and population growth. According to
the World Economic Forum, between 1950 and 2010, world population grew from 2.5 to
6.9 billion, with much of that growth occurring in areas more prone to the impact of
natural disasters, such as coastal areas and riverbanks. Existing limitations in public and
private sector disaster risk prevention management and planning, globalisation, and a
growing concentration of assets and people in urban centres and high exposure areas are
also contributing to the rise in disaster-related losses.

 The 10-year average of economic losses since 2000 totaled US$110 bn, while
average insured losses totaled US$35 bn. In 2010 alone, disasters cost the global
economy US$130 bn. [Source Munich Re 3 January, 2011]. That figure has
nearly doubled this year. Economic losses of selected 2011 disasters, including
January’s landslides in Rio de Janeiro, the February New Zealand earthquake and
the earthquake and tsunami in Japan on 11 March, will exceed US$200 bn.

Natural catastrophes affect all sectors of business, both directly and indirectly. Disasters
can cause operational and supply chain disruptions through the physical damage to
property and/or loss of critical resources and infrastructure, such as energy supplies and
transmission, public infrastructure and distribution networks.

Disasters also affect businesses’ staff and customers, both economically and physically,
especially those living in the affected areas. In developing countries, disasters pose grave
consequences for the survival, dignity and livelihoods of all people, particularly the poor.
At the same time, increasing disaster risks threaten hard-won development gains and
future sustainable development in all countries. The World Bank reports there have been
3.3 million deaths from natural hazards since 1970, or about 82,500 a year, with large
year-to-year fluctuations and no pronounced time trends. Droughts are the deadliest of
the four hazard categories (earthquakes, floods, and storms are the others) and poor

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International Strategy for Disaster Reduction
 
countries suffer disproportionately - almost 1 million people died in Africa’s droughts
alone. Between 1980 and 2009, 84 % (865,000) of people killed by weather disasters
lived in poor countries [Source: Global, aber gerecht (2010), Munich, ISBN 978 3 406
60656 4]. According to CRED (University of Louvain, Brussels) the annual average
death toll for the 2000 decade was 78,000, which is considerably higher than the previous
decade. [Source: Press Release UNISDR 2010/01, 28 January 2010]

While the primary responsibility for protecting communities is vested in national and
local governments, the private sector plays a crucial role in managing disaster risks and
building resilience.

The private sector shares both the consequences of these risks and a responsibility to act
in reducing them. In most countries, the private sector is the primary generator of GDP,
employs the majority of the population and is the dominant vehicle for innovation and
investment. It also has the know-how, organization, resources and capacity to provide
solutions. Ensuring a safer and more sustainable future requires coordinated action by
multiple actors worldwide through partnerships at multiple levels in politics, technology,
economy, civic/community groups and the public that combine resources and expertise.

The economic case for ex-ante disaster risk reduction and management is compelling:

 For every US$1 invested in resilience and prevention, between US$4 and US$7
are saved in response (Source: California Emergency Management
Agency/UNDP).

 Multi-national companies with best practices in managing their property risks

produced earnings on average 40% less volatile than those with less advanced risk
management plans. [Source: Dr Deborah Pretty, Oxford Metrica Risk Financing
Strategies: The Impact on Shareholder Value for FM Global].

 Average property loss is 20 times larger for companies with weak physical risk
management practices, while the average loss per location exceeds US$3 million
versus US$620,000 for companies with robust disaster scenario management
plans. [Source: Dr Deborah Pretty, Oxford Metrica Risk Financing Strategies: The
Impact on Shareholder Value for FM Global].

 Large businesses with strong risk management programmes compared with those
with weak risk management practices, experience, on average, catastrophe losses
that are seven times less costly—an average of US$478,000 per loss compared
with US$3.4 million. [Source: Dr Deborah Pretty, Oxford Metrica Risk Financing
Strategies: The Impact on Shareholder Value for FM Global]

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International Strategy for Disaster Reduction
 
In recent decades the sustainability movement has demonstrated tremendous energy and
progress focused on the humanitarian and environmental dimensions, including climate
change control. The same level of energy and commitment is now needed for disaster risk
reduction and climate change adaptation. Sustainability cannot be achieved unless
societies both reduce their environmental impacts and become more resilient against
natural catastrophes.

In 2005 the United Nations (UN) brought this issue to the global forefront by initiating
the International Strategy for Disaster Reduction (ISDR) and adopting the Hyogo
Framework for Action 2005-2015: ‘Building the resilience of nations and communities to
disasters’.

Through these initiatives, the UN recognizes that disaster response and humanitarian
relief efforts alone will not suffice. Unless the root causes of disaster impacts are
recognized and addressed, adaptation is improved, and public awareness is elevated, the
risks will impact beyond all possible humanitarian response and resources. Raising
disaster risk awareness, promoting a culture of prevention and mobilizing adequate
resources to build resilience are both an imperative and an investment in the future, with
substantial returns for all.

Recognizing the importance of the above, the undersigned member of the private sector
commits to the following:

1. We acknowledge the threat posed by disasters and the importance of building

resilience and recognize our role and responsibility in encouraging, supporting
and acting on the reduction of disaster risks. We commit voluntarily and to the
best of our abilities to create awareness within and outside our organizations,
identify vulnerability and their root causes in our areas of activity and influence,
invest in functional resilience and apply risk reduction and management principles
in our decisions within our businesses, and, to the extent possible, in our sectors,
supply chains, client bases, and global networks. We commit to make disaster risk
reduction and resilience building an integral part of our sustainable development
strategy, goals and programs.

2. We recognize the leading role of the ISDR and the importance of the Hyogo
Framework for Action1 as a guiding reference for global disaster risk reduction.

3. We commit voluntarily and to the best of our abilities to embrace, support and
enact, within our spheres of influence and capacities, the following Five
Essentials for Business in Disaster Risk Reduction, and to partner with the public

                                                       
1
 Hyogo Framework for Action link: http://www.unisdr.org/we/coordinate/hfa

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International Strategy for Disaster Reduction
 
sector with a focus on local action, taking into account the most vulnerable
population groups, such as women, children, elderly and the poor. We
acknowledge that at any point in time we may be most active in a subset of the
below action items.

Call for Action: Five Essentials for Business in Disaster Risk Reduction

Countries that develop policy, legislative and institutional frameworks for disaster risk
reduction and that are able to develop and track progress through specific and measurable
indicators have greater capacity to manage risks and to achieve widespread consensus for,
engagement in and compliance with disaster risk reduction measures across all sectors of
society. In an effort to support the three aforementioned commitments, we agree to the
following Five Essentials:

1. Promote and develop public-private partnerships for disaster risk reduction to

analyze the root causes of continued non-resilient activity, such as in the urban
built environment and related infrastructure, and develop frameworks and policies
to change these causes. Encourage, develop and use financial risk-sharing
mechanisms to ensure the resilience of facilities and communities to hazards and
allocate adequate resources for these.
2. Leverage sectoral private sector expertise and strengths to advance disaster
risk reduction and mitigation activities, including enhanced resilience and
effective response. For instance, the Engineering and Construction industry can
drive safer land use planning and construction standards, while the Information,
Communications and Telecoms sector could play an essential role in hazard
monitoring, disaster warning, and communications. Likewise, the insurance
industry can lend its expertise in risk assessment and evaluation and promote the
widespread use of risk transfer tools, including micro insurance/ insurance pools
to enable faster recovery and reconstruction, as well as provide fast liquidity in
times of crisis. Utilities and Transport industries can influence water management
(dams/sea walls, irrigation, desalinization, flood management, sewerage draining)
and business continuity activities, including contingency service plans and supply
chain resilience.

3. Foster a collaborative exchange and dissemination of data: Share information

on assessment, monitoring, prediction, forecasting and early warning purposes
and action between the public and private sectors, including through cooperation
with UNISDR, ISDR System partners and other international, regional and
national actors. Likewise, encourage staff, suppliers, individuals/people, clients,
their families and communities to take action to reduce risks and build resilience
using communications, awareness-raising events, training and recognition, and
conduct regular disaster preparedness exercises with a view to ensuring rapid and

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International Strategy for Disaster Reduction
 
effective disaster response and access to essential food and non-food relief
supplies, as appropriate, to local needs.

4. Support national and local risk assessments and socio-economic cost-benefit

analyses and capacity-building, and demonstrate opportunities where resilience
building and disaster risk reduction is a sound economic strategy, with attractive
returns and competitive advantages.

5. Support the development and strengthening of national and local laws,

regulations, policies and programmes that enhance disaster risk reduction and
improve resilience. Develop, apply and implement internal codes of conduct,
standards and procedures through the active engagement in national and regional
mechanisms and platforms, and the allocation of adequate financial and other
resources.

Signature:

____________________________
Organization

____________________________
Representative

____________________________
Location

______________
Date

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