The Urgent Need for Public-Private Collaboration for Improving Disaster Resilience
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Building disaster resilience in a city or a company requires working across the “system of systems” that exist. While many of these systems are in the public sector, many – including most of the economic systems in the city, and often, many of the utility services – are not. Therefore, like it or not, disaster resilience requires public-private collaboration. In the US, this is not recognized and acted upon as widely as it needs to be.
While seismic risk is a constant, there is clear evidence that acute events such as floods, storm surges, tornados, hurricanes and wildfires, or chronic stresses such as droughts, are occurring in the US with increased frequency and intensity. For example, there have been 26 500-hundred-year flood events in the last 10 years. At the same time, the US has become more urbanized, with 82.5% of its population expected to be city-based by 2020, and the figure for the urban share of GDP will be higher still. More economic activity, lives and livelihoods are becoming concentrated in urban locations. We therefore live in a time where, for many parts of the US, the question is not if a disaster will cause major economic and social disruption, but when.
Unfortunately, disaster resilience is frequently pursued separately by the public and private sectors in the US. Federal, state, and local governments take it as their role to execute disaster preparedness and emergency response for their populations; however, economic recovery is often not addressed. The public sector does not necessarily engage businesses, nor does it seem to plan for the economic “reboot” required after a disaster, resulting in business disruption continuing for much longer. For example, 25% or more of the $62.2 billion insured losses after Hurricane Katrina in 2005 was for business continuity, due in part to the badly handled initial response to restarting the local economy. The population of New Orleans has declined 24% since 2000, a drop of 115,674 residents by 2018; if economic damage is equated to brain damage, New Orleans had an economic stroke. Recovery from such an event often takes decades.
Businesses, for their part, often focus on their operational continuity, while simply believing that insurance and/or government will take care of any other issues that arise. This is a myth on multiple levels. For example, the National Flood Insurance program for business real estate damage payments is capped at $500,000: the remaining portion falls to individuals, governments, and companies who self-insure, whether knowingly or otherwise. Insurance coverage for asset loss often has limitations as well. Businesses also overlook the possibilities that if power and communications are interrupted, or workforces are preoccupied after a disaster with protecting their families and houses, production might cease for days, weeks, or even months.
A further prospect is supply chain disruption, as was experienced after Hurricane Maria in Puerto Rico, where critical pharmaceutical facilities were shut down due to power interruptions, loss of work force or lack of critical raw materials.
Small businesses are particularly vulnerable. Over 80% of the small businesses in New Orleans were destroyed by Hurricane Katina. One recent private survey found that, of the approximately 20% that survived, most subsequently took actions to elevate their premises, retain insurance, install stand-by power generators, move their data storage off site and secure other water and waste disposal options. However, among those businesses that had started since Katrina, very few had taken precautions, and some interviewees even expressed the belief that it was the responsibility of government to do what was necessary. In the words of Edmund Burke, “those that do not know history are doomed to repeat it.”
The lack of awareness of public-private sectors interdependence is worrying, because the concentration of lives and livelihoods noted above places a huge premium on better ways of operating collectively for disaster risk reduction. Some larger businesses and cities understand this, for example through the work of Rockefeller’s 100 Resilient Cities, the C40, or the UN’s Making My City Resilient campaign, but many smaller cities and smaller businesses do not. There are over 28 million small businesses in the US, most of them in cities. They provide the life blood of much of the US economy: three out of every four new jobs in the US are created by small businesses. The idea that you can make a city resilient without engaging businesses, and small businesses, is fundamentally flawed.
Businesses Depend on Government
Obviously, businesses depend on governments doing their primary role of providing infrastructure, creating livable environments for people, enforcing development standards and keeping services running. Beyond these immediate dependencies, however, governments can further help and assist businesses (especially small and medium sized businesses who may not have the required resources or knowledge) to take steps to make themselves more resilient. For example:
- Cities need to review whether current building codes meet or exceed the maximum hazard levels expected for the area, in order to determine the extent to which they are invoking risk.
- State and local governments may have access to data and projections of risk (for example, flood maps or hazard maps for earthquakes) produced by state mapping agencies, or projections of some impact of climate change. Governments can take steps to communicate these hazards to businesses that may not otherwise be aware of them, and they can encourage the creation of continuity plans.
- City governments could conduct regular response drills to mirror probable local disaster events.
- Governments, perhaps working with the local chamber of commerce and universities, could create pro-forma continuity plans and even helping businesses complete them, as needed. Governments could review these plans collectively and help correct erroneous assumptions – making the planning process part of a dialog rather than just a bureaucratic chore. The New Orleans survey above determined that good practices that were in place were not shared between businesses located on the same block or in the same neighborhood: if the business continuity exercise was carried out on a neighborhood basis, this would encourage dialog and sharing.
- Businesses may also need assistance in the form of tax credits, no- or low-interest loans, or grants to incentivize businesses to conduct resilience improvement actions.
- The City should upgrade building codes or establish requirements to retrofit existing structures, along with a phasing-out of permits for any “grand-fathered” facilities known to be insufficiently resilient.
- Cities could perhaps also steer their contracts towards businesses known to be disaster resilient.
Over time, one might expect insurance costs and risk premiums to be reduced for businesses in cities that are better prepared and more resilient. Cities will come 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 requires a way of thinking, operating and innovating that powers a collective way of surviving and thriving. The more effort and imagination we put into how these are provided, the more beneficial it will be for all.
Government Depends on Businesses
Just as businesses require help from government to become more resilient, government benefits from what businesses may have to offer. 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 services need to be carefully assessed for completeness. Beyond that, however, there are several other areas where businesses can help:
- Businesses offer a communication channel to their workforces for education about acute and chronic hazards, preparation, and the required response. This may be an efficient way to reach groups of citizens at one time, 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 and help restore normalcy after an event.
- Businesses talk to other businesses – so working with some “early adopters” to build awareness of good practices may lead to the word spreading further and faster. Organizations such as the Building Owners and Managers Association (BOMA) are actively involved in enabling such sharing.
- Businesses can selectively steer their procurement toward resilient suppliers. The automotive industry now requires Tier 2 and 3 providers to have a resiliency plan – this practice could be more widespread.
- Businesses may have facilities or equipment which governments can arrange in advance to 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 resiliency plans to check that their assumptions are compatible with the government plans for emergency response; or to detect potential bottlenecks, for example where many other businesses would be competing for the same back-up transportation route or warehousing.
- Larger businesses can act as “conveners” for the many agencies that may be important to the resilience of an area. The US 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 its facilities to continue functioning.
- Larger businesses may also have specific skills such as risk assessment, scenario planning, project management or engineering that might be required to complete and execute resilience plans – these could be loaned to the cities and agencies, or other businesses, that lack them.
Time is of the essence for the public and private sectors to collaborate and cooperate (operate collectively) to create more resilient communities. The Sendai Framework for Disaster Risk Reduction 2015-2030, approved by 187 countries in March 2015, has clear targets for substantial reductions in disaster mortality, numbers of affected people; economic losses; and disaster damage to critical infrastructure and disruption of basic services. Targets also relate to substantial Increases in national and local disaster risk reduction strategies by 2020, and access to multi-hazard early warning systems and disaster.
The US was a signatory to the Sendai framework. In some US cities, business organizations and city governments have come together to start to plan disaster resilience programs, sometimes under the auspices of NGOs such as Center for Climate and Energy Solutions (C2ES) and Rockefeller Foundation. In these cities it is possible to see that collaborative, indeed symbiotic relationships may be evolving along the lines discussed. But in far too many communities, this dialog has yet to begin. At a time when what were previously thought to be 500 year events are apparently becoming commonplace, that is an omission and risk that few cities or businesses can afford to take. The road to resilience runs through collaboration between public and private sectors – it’s time for both to take the first steps.
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