pwc & unisdr driving sustainable growth & resilience advisory by oz ozturk february 2014
TRANSCRIPT
PwC
Introduction
1 Setting the scene
2 Collaborating with the United Nations, UNISDR
3 Working with the private sector
4 Some lessons
5 The future
Slide 2
2 The opportunity
PwC
Natural hazards are a growing concern for global businesses…
Natural hazards 2011 – a global sample
Winter Storm Joachim – DecFrance, Switzerland, Germany
Flash floods – NovFrance, Italy, Spain
Floods – Aug-SepPakistan
Tropical Storm Washi – DecPhilippines
Cyclone Yasi – FebAustralia
Floods – Aug-NovThailand
Drought – Oct-SepSomalia
Flash floods – JanBrazil
Floods, landslides – OctGuatemala
Wildfires – Apr-SepUSA
Drought – OctUSA
Wildfires – MayCanada
Severe storms, tornadoes – MayUS
Hurricane Irene – AugUS, Caribbean
Floods – Apr-MayUS
Severe storms, tornadoes – AprilUS
Flash floods – Dec-JanAustralia
(…) Toyota, Honda Motor Co. and Nissan Motor Co. -- are losing 6,000 units of production daily (…) lost production may cost more than $500 million a month (…)
(…)“the whole PC production chain is stuck at a bottleneck” because of the constraints on hard disc supply. (…)
(…)Tens of thousands of people have fled Bangkok, which accounts for 40 per cent of the nation’s economic output (…)
UNISDR and PwC • Working together to reduce Disaster Risks
(..) Superstorm Sandy will end up causing about $20 billion in property damages and $10 billion to $30 billion more in lost business (…)
and one of the latest in Nov 2012
PwC Slide 4
With a significant socio-economical impact…
Cumulated impacts of disasters since the 1992 Rio de Janeiro Earth Summit
4.4 Billion 2.0$ Trillion 1.3 Million
People affected
Financial impact
People killed
Top 3 disasters
account for 80+ %
FloodDroughtStorm
Storm Earthquake
Flood
EarthquakeStorm Extr.
temperature
Top 3 countries impacted
China 2.5 $bnIndia 938 $mioBangladesh 136
$mio
USA 560 $bnJapan 402 $bnChina 331 $bn
Haiti 230’675Indonesia 185’152
Myanmar 139’351
Source: Physical risks from climate change, DGA, LLC
PwC
Collaborative disaster risk management bears a multi-billion dollar savings potential
The costs of corrective disaster risk management are similar to the ones of climate change adaption and are estimated at USD 75-100 billion annually between 2010 and 2050.
If all the USD 1.9 trillion of FDI foreseen for 2014 were disaster-risk sensitive, this would represent critical exposure.
10:1 ratio - Private sector practice shows that for each 1$ invested in disaster risk management, there are potential savings of up to 10$ should a disaster occur.
63% of businesses see opportunities to generate value from disaster risk reduction.1
Natural hazards: a multi-billion USD cost factor
Investing today means making savings tomorrow
1 Economist Intelligence Unit survey
Our joint study ‘Working together to reduce disaster risk’ has shown that opportunities for the private and public sectors to collaborate on risk reduction and building systemic resilience are still largely untapped.
Most corporate disaster risk reduction initiatives have been introspective and remained largely unshared. Similarly, governments, international organizations and NGOs have promoted initiatives without meaningful private sector involvement.
The potential of collaborative disaster risk management is widely untapped
Slide 5
PwC
Resilience VS Response
Slide 6
‘Pre’ disaster ‘Post’ disaster
Information: Understand natural hazards & disaster
risks
Impact Assessment
Define scenarios
Strategy
Communication: Notification
Immediate action, business continuity
Remediation
Accounting: Capture and track ongoing expenses
Colla
bora
teColl
ab
ora
te
Resilience Response
PwC
Successful PPP in driving resilience has 3 major pillars:Creating awareness, Enabling exchange and Generating collaborative action
Creating shared
awareness
Enabling exchange
Generating collaborative
action
“Shared benefits for shared investments”:Releasing the untapped
potential of collaborative Disaster
Risk reduction
Creating shared awareness is an essential precondition for effectively channeling organizations’ DRM efforts towards collective action. Creating shared awareness means raising consciousness about the importance of carefully managing disaster risks and emphasizing possible ways and benefits of collectively addressing them.
Enabling exchange between community members means facilitating the sharing of information in the widest sense of the word: knowledge, know-how, experience, proven practice, insights and ideas. An open and ongoing dialogue is indispensable to sustain cohesion and to unveil opportunities for concrete collaborative action.
Generating collaborative action means guiding community members’ disaster risk reduction efforts around common initiatives. Only projects with tangible benefits can sustainably foster trust and credibility.
Slide 7
PwC Slide 8
Strong link with public
organisations
Our Initiative
UNISDR
Expertise in public response to
disaster risk management
Strong link with private companies
Expertise in corporate risk management
Collaboration
Private
Public
Driving sustainable resilience
PwC
Engaging the private sector to share best practices and create a holistic resilience strategy
Technology
People
Process
Structure
Strategy
Reputational
Financial
Human
Environmental
Operational
Asset damage
Activity disruption
Collateral damage
CorporateSupply chain Public
Hazard type
Impact dimensions
DRM strategies
DRM drivers
Und
erst
and
Res
pon
d
Geological Hydrometeorological
Avoidance Reduction Sharing Acceptance
Short-term or long-term responseResponse type
• Good practice• Maturity assess-
ment• Methods and tech-
niques• DRM commu-
nity
Disaster Risk Management Framework (‘DRM-F’)
1
‘Working together to reduce disaster risk’
3
Defining Business Strategy2
Annual ‘GAR’ Report on Disaster Risk Reduction
4
Key drivers of change
Slide 9
PwC
Disaster risks management framework
Slide 10
Assets &Infrastructure
Governance & Organisation
Technology
GeologicalHydro-
Meteorological
Hazard categories
Disaster risk categories
DRM strategies
DRM options
DRM drivers
What
Human
Environmental
Financial/Operational
Reputational
Asset damage
Activity disruption
Collateral damage
Avoidance
Reduction
Sharing Acceptance
Corporate Supply Chain
Private-Public
Impact dimen-sions
Term
inolo
gy
DR
M c
om
mu
nit
y
Matu
rity
mod
el
Pro
ven
pra
ctic
es
Tech
niq
ues
Enable
Toolkit
DR
M p
rocess
How
Un
ders
tan
dR
esp
on
d
• Storms and Hurricanes• Floods• Sandstorms• Extreme Heat and Cold and
Droughts• Avalanches• Landslides
• Earthquakes• Volcanic
eruptions
• Facility deterioration
• Damage of transport vehicle
• Supply disruption• Production
bottleneck• Distribution
failure
• Oil spill• Release of
chemicals
• Asset emplacement
• Asset securisation, e.g. earthquake resistant buildings
• Business continuity planning
• Alternative sourcing
• Supply Chain continuity planning
• Infrastructure development, e.g. shelters, damns
• Development of rescue services
• Educational measures to build understanding and awareness
PwC
The objective
Slide 11
To improve the management of disaster risks by business, for improved performance and for
the benefit of the company’s wider relationships with suppliers, communities and
marketsBy fostering dialogue and interaction between the private and the public sector
By collecting and gathering knowledge, tools and good practice
By setting up a link to the disaster risk community in the form of a platform of dialogue and exchange
By developing a conceptual framework to manage disaster risks caused by natural disasters
PwC Slide 12
Findings from working with the private sector
Industry leading companies have set out their objectives and stepped up efforts to reduce disaster risks, but there is opportunities for improvement and know-how remains unshared
‘A widely untapped opportunity’ – Companies have developed know how, display a desire to share it and have a chance to collaborate with peers and the public sector to increase risk resiliency rather than acting alone
Public and private sectors play an active role in addressing the challenges that hinder collaboration and in improving their ongoing DRM
Collaborative DRM requires a common vision and the long term cultivation of broad based relationships
Finding 1
Finding 2
Finding 3
Finding 4
Share
Value
Dependant
Holistic
PwC
Case examples.
13
Development of an iPad application which displays a global heatmap of assets – One of our sample companies developed an application which displays the current level of compliance of each of its assets globally. The company used external help to identify the risks for each region where they operate, and has an independent entity conduct yearly audits of its operations. The site are encouraged to raise their compliance level through positive / negative incentives.Local collaboration with peers in the same industry – One of our sample companies identified the risk of fire as a major threat to one of their critical asset. This threat is shared by a peer in the same industry and both companies have agreed to collaboratively share resources in case of a fire.Working with local authorities to identify natural hazard risk exposure – One of our sample companies is working with public authorities to determine potential natural hazards risk. The company relies on public authorities input to develop working sites in certain regions and locally collaborates with them in case of a disaster.
Preparation of ‘disaster kits’ and interest from local government – One of our sample companies prepared and shared ‘disaster kits’ in preparation for a major hurricane threat. The local government identified this as an outstanding idea and collaboratively worked with the company to extend the distribution of kits to the public.Hiring staff with a public crisis management background – Some of our sample companies started hiring staff with a public or military crisis management background to be best prepared in case of a disaster.
Slide 13
PwC
Case examples cont.
14
Reducing dependency on key suppliers – Some of our larger sample companies are increasing the supply chain flexibility by increasing supply chain flexibility or integrating critical suppliers.Collaboration with peers in the industry / region to send suppliers in an affected zone – Some of our sample companies are collaborating with peers to concentrate supplies in the few available transportation means in order to send suppliers in affected zones.Preparation of ‘one pagers on country risks’ – One of our sample companies has developed a database containing ‘one pagers’ of risks in each of the countries they operate in. These risks are identified by local operations and the global headquarters reviews the one pagers periodically and defines actions accordingly.Transferring work to other sites – One of our sample companies set up a business continuity plan which allows to offload work to other sites if one of their operations is hit by a disaster.
Remote access to work – Some of our sample companies provide the tools and developed the necessary processes for employees to be able to work remotely in case access to the office is impossible.Getting to know public authorities – Some of our sample companies get to know public authorities and stress how critical it is to know your counterpart in order to collaborate in case of a disaster.Scenario planning – Some of our sample companies in Japan have started to collaborate with the government and are running scenarios to define the processes and standards which will lead to create minimum level of service (telecommunication, energy supply, lifeline services) which are necessary during a disaster.
Slide 14
PwC
Some lessons to share
1.Collaboration equals early and continuous engagement
2.Private sectors speaks a different language to Public organisations
3.Horizons of investment are long whereas Mr Market shortsighted
4.Transfer of risk is a great concern
5.Current economic drivers do not drive resilience
6.Regulatory contraints hinder collaboration
7.We have a tendency for amnesia as a species
8.PPP tends to focus on financial funding not holistic resilience
Slide 15
PwC
It is a new way of collaborating, on a global scale, to unlock the potential for public and private sector actors who are ready and willing to make a step forward and take leadership on disaster risk reduction.
The United Nations Office for Disaster Risk
Reduction (UNISDR) and PwC,
the founding members, join with:
• R!SE aims to convene stakeholders who have the ability and resources to influence the future direction of DRM.
• Business, Investors, Insurers, Public Sector, Education professionals and Civil Society.
The R!SE Initiative is an ambitious global
response to a daunting global challenge.
By bringing together 6 connected communities
What
How
Who
• The Economist Intelligence Unit (EIU)• Florida International University (FIU)• Principles for Responsible Investment (UNPRI)• AECOM• Willis
• as well as other companies and institutions to build a broad alliance to support the R!SE Initiative.
The R!SE Initiative
Slide 18
The overall objective of the R!SE Initiative is to make all investments risk-sensitive.