China and India at high economic risk from natural disasters

12 August 2011

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11 August 2011 | Adam Leach

The potential impact of natural disasters in the emerging economies of India and China is intensified by a lack of preparedness, a report says.

The Natural Hazard Risk Atlas 2011, published by Maplecroft, says that while the US and Japan face the highest economic exposure to natural hazards, businesses in emerging economies are more at risk because these nations lack the capacity to cope with the effects of a major disaster.

The report’s ‘Socio-economic Resilience Index’ ranked countries in terms of the degree of risk created by their preparedness to deal with such events. The level of risk was calculated by assessing a number of factors, including economic robustness, strength of governance, how well infrastructures were established, disaster preparedness and building regulations. While the US and Japan were low-risk, China and India got a high-risk rating.

Alyson Warhurst, CEO of Maplecroft, said: “The emerging economies, although buoyant with growth, lack the socio-economic resilience to limit their disaster risk. This could threaten their economic growth and the extent to which businesses with operations there hope to flourish. As the purchasing power [of these nations] grows, so too will the absolute economic value exposed to natural hazards.”

Identifying the growing pressure on businesses to understand the risks associated with natural disasters, the report cites the fact that the BRIC group of economies – Brazil, Russia, India and China – is expected to increase its share of economic output from a quarter to a third by 2020.

In June, procurement professionals discussed how supply chain risks caused by natural disasters could be overcome. During the CPO Agenda Question Time debate in London, Nick Wildgoose of Zurich FinancialServices urged purchasers to check whether any of their supply operations were located in earthquake or flood zones by asking insurers.

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