Environment & Natural Resources

Mitigation of Natural Disasters

A. Description of the issue
According to the 2008 World Disasters Report, natural disasters in 2007 affected more than 200 million people, a 40% increase over 2006.1 The majority of those affected live in the developing world. Major natural disaster events can cause great human and material damage and thus set back economic development in the most vulnerable countries by years. According to the same report, natural disasters in 2007 inflicted a worldwide economic cost of nearly US$ 63.5 billion. The economic damage caused by the 2008 Sichuan earthquake is estimated to range between US$ 20-75 billion. Poor countries are often the most affected by disasters. But when they occur in developed countries where the concentration of value is high, economic consequences can be much more severe, as illustrated in 2005 when hurricane Katrina hit the United States; this catastrophe remains the most costly disaster in the history of insurance.2 The mitigation of natural disasters may involve putting advanced early-warning systems in place, introducing better risk assessment methodologies, understanding key interested parties risk perceptions and decision processes, investing in protective measures for property and infrastructure, providing adequate financial coverage and preparing leaders to respond to extreme events. Although focused on natural calamities, the Council seeks to identify operational and leadership principles for preventing, mitigating and responding to a host of large-scale risks ranging from climate change and international terrorism to financial crises and governance failures.

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Mitigation of Natural Disasters

B. Dimensions
Guiding principles: Creating guiding principles will provide a framework for taking actions to reduce global risks from natural disasters. They should also be relevant to other large-scale risks, whether from climate change, terrorism, financial crises or governance failures. Linking pre-disaster measures with post-disaster measures: The development of early warning systems, the preservation and effective management of eco-systems, investment in loss reduction measures for property and infrastructure, and provision for financial protection through insurance-type mechanisms are needed. Many countries lack the resources to effectively monitor disasters and invest in these measures. What lessons can be learned from developed nations to assist developing countries? Climate change and natural disasters: We need to better understand what scientists can tell us about the relationship between climate change and future losses from natural disasters and the degree of uncertainty surrounding the models they have developed. What steps should be taken now? Innovative risk management strategies: Strategies for reducing risks from natural disasters that can be utilized in other contexts through publicprivate partnerships should be proposed and examined. These strategies would be guided by the current institutional arrangements of the country under consideration and the decision processes of the relevant interested parties. Education: Education on responses to natural disasters can greatly mitigate their damage. How can the experience of countries with effective education programmes best be applied to other nations? Emergency management/disaster relief/humanitarian assistance in countries hit by natural disasters: Large-scale disasters can greatly stretch domestic and international relief organizations. How should countries best integrate and coordinate their own efforts with those of donors? Business response to natural disasters: Natural disasters often force the mass movement of people, and developing countries may face particularly costly recovery and reconstruction processes.3 Business firms can play an important role in helping rebuild post-disaster communities. What skills, expertise and resources can they provide domestic and international organizations? Crisis leadership: What do public, private and NGO leaders need to know about risk assessment, behavioural biases, decision-rules, and their personal and organization leadership to prevent, prepare for and respond to natural disasters?
1 IFRC, World Disasters Report, 2008 2 Katrina damage estimate hits $125B, 9 Sept. 2005, http://www.usatoday.com/money/economy/200509-09-katrina-damage_x.htm 3 The UNHCR estimates that in 2007 the number of people uprooted as a result of natural disasters, conflict, food shortages and other causes reached 67 million.

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List of Members
Co-Chairs
*Howard Kunreuther, Cecilia Yen Koo Professor of Decision Sciences and Public Policy, The Wharton School, University of Pennsylvania, USA *Michael Useem, Professor of Management and Director, Center for Leadership and Change Management, The Wharton School, University of Pennsylvania, USA

Members
*Sean M. Cleary, Chairman, Strategic Concepts, South Africa *Arnold Howitt, Executive Director, Ash Institute for Democratic Governance and Innovation, John F. Kennedy School of Government, Harvard University, USA *Bridget M. Hutter, Director, Centre for Analysis of Risk and Regulation, London School of Economics and Political Science, United Kingdom *Herminia Ibarra, The Cora Chaired Professor of Leadership and Learning and Professor of Organisational Behaviour, INSEAD, France *Michel Jarraud, Secretary-General, World Meteorological Organization (WMO), Geneva Haruhiko Kuroda, President, Asian Development Bank, Manila *Herman Leonard, Professor of Public Management, John F. Kennedy School of Government, Harvard University, USA *Thomas E. Lovejoy, President, The H. John Heinz III Center for Science, Economics and the Environment, USA *Erwann Michel-Kerjan, Managing Director, Center for Risk Management and Decision Processes, The Wharton School, University of Pennsylvania, USA Markku Niskala, Secretary-General Emeritus, International Federation of Red Cross and Red Crescent Societies (IFRC), Geneva *Kristine Pearson, Chief Executive, Freeplay Foundation, United Kingdom *Detlof von Winterfeldt, Professor, Daniel J. Epstein Department of Industrial and Systems Engineering, University of Southern California (USC), USA

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