Key Asian cities expose supply chains to extreme natural hazard risks

16 March 2015

Cities in Asia are the most exposed to natural disasters threatening global supply chains, according to research.

The strategic markets of the Philippines, China, Japan and Bangladesh have more than half of the 100 cities most exposed to natural hazards, highlighting the potential risks to foreign business, supply chains and economic output in Asia from extreme weather events and seismic disasters, according to research from global risk analytics company, Verisk Maplecroft.

The fifth annual Natural Hazards Risk Atlas (NHRA) assesses the natural hazard exposure of over 1,300 cities worldwide, which are set to be significant economic and population centres over the next 10 years.

According to Verisk Maplecroft, natural hazards are one of the most severe disrupters of business and supply chain continuity, and also threaten economic output and growth in some of the world’s key cities, especially those located in the emerging markets.

Port Vila, the capital city of the pacific island of Vanuatu - ranked as the most exposed city in the world - was hit by the category five tropical storm, cyclone Pam, on 13 March. A nationwide state of emergency was declared yesterday.

According to the NHRA, several key manufacturing and logistics hubs are highly exposed to natural hazards. One of the world’s busiest ports Tokyo is ranked 22nd, while the commercial centres of Manila (fourth), Taipei City (eighth) and Dhaka (35th) and the important Chinese manufacturing locations of Wenzhou (49th), Foshan (63rd) and Dongguan (80th) all feature among the 100 most exposed cities.

Of the top 100 cities with the greatest exposure, 21 are in the Philippines, 16 in China, 11 in Japan and eight in Bangladesh. The analysis considers the combined risk posed by tropical storms and cyclones, floods, earthquakes, tsunamis, severe storms, extra-tropical cyclones, wildfires, storm surges, volcanoes and landslides.

As typhoon Haiyan in the Philippines and the tsunami in Japan showed us, natural hazard events can have far-reaching and long-lasting impacts on supply chains, business and economies,” said Richard Hewston, principal environmental analyst at Verisk Maplecroft.

“Understanding how, where and why those risks manifest is an imperative in managing potential shocks.”

Despite gains, the fastest growing economies still lack resilience to natural hazards, and the risk is often compounded by poor capacity to manage and respond to them.

“With foreign investment continuing to flow into countries highly exposed to natural hazards, those which are unable to demonstrate robust resilience may lose an element of their competitiveness,” said Hewston. “Company decision-making over sourcing locations or market entry is increasingly influenced by issues such as strength of infrastructure and institutional robustness.”

The 10 most exposed cities

1. Port Vila, Vanuatu
2. Tuguegarao, Philippines
3. Lucena, Philippines
4. Manila, Philippines
5. San Fernando, Philippines
6. Cabantuan, Philippines
7. Batangas, Philippines
8. Taipei City, Taiwan
9. San Carlos, Philippines
10. Naga, Philippines

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