Andrew MITCHELL ACF, France Marcus OXLEY Global Network for Disaster Reduction UK, United Kingdom Otto KOCSIS Global Head of Technical Center Business Resilience, Zurich Insurance Company Ltd, Switzerland

1. ‘A converging vision of resilience
building between the private
sector and civil society’
Marcus Oxley - Global Network for Disaster Reduction
Otto Kocsis - Zurich Insurance Group Ltd
Andrew Mitchell - Disaster Risk Management consultant

2. Building Resilient Nations and
Communities
Marcus Oxley
Global Network of CSOs for Disaster Reduction
4th International Disaster and Risk Conference
August 2012

3. CONTEXT: Multiple Risks are increasing globally
and can threaten national security
US$
Time
 Disaster losses increasing in all countries
 Increasing complexity, uncertainty, fragility
 Most common disasters are frequent, extensive, small-scale,
climate-related
 Majority losses; uninsured, under-reported, no compensation

4. CONTEXT: Multiple Risks are increasing globally
and can threaten national security
US$
Time
 Disaster losses increasing in all countries
 Increasing complexity, uncertainty, fragility
 Most common disasters are frequent, extensive, small-scale,
climate-related
 Majority losses; uninsured, under-reported, no compensation

5. Some Drivers of Risk:
Social:
• Increased exposure, vulnerability to extreme hazards
• Population growth / demographic changes
• Unplanned migration & urbanisation
Economic:
• Poverty / Severe economic disparity / fiscal imbalances
• Increasing globalisation
• Unsustainable patterns of production & consumption
• Commodity Price volatility
Environmental:
• Ecosystem decline
• Climate change
Political:
• Weak / failing governance
• Conflict / insecurity / violence

6. Some impacts of disasters:
Private Sector Community
 Loss of Assets - buildings / • Loss of life / injuries
equipment / stock
 Loss of supplies / raw • Loss of livelihoods
materials / customers
 Loss of value creation • Loss of housing
capabilities/market position
 Impact on customer • Loss of household assets
 Impact on workforce • Loss of infrastructure

7. The case for a Resilience-based Approach
“the goal of all theory is to make as simple as possible whilst
adequately representing reality”
Appropriate solutions must be flexible, holistic and take a
“systems-based” perspective
Resilience is at the heart of sustainable social and
economic development
Community resilience is foundation of national resilience
Resilient economies are central to resilient communities
Building social and economic resilience is the best
way to protect against multiple risks in the face of
complexity and uncertainty

8. Building general (systemic) resilience:
Economic
Common Resilience
Principles
Social
Environment
Different sectors, different risks - Common
principles

9. Core Values & Principles drawn from disasters experiences
can inform actions to build resilience

10. Extreme events (disasters) provide critical insights
to the “principles” of resilience:
Principle Action
1. Preparedness Early warning; Contingencies
2. Responsiveness Response procedures; feedback
3. Inclusive Representation ; Participation
4. Self-organising/ autonomy Subsidiary; Decentralisation
5. Learning Sharing Knowledge / information
6. Connectedness Collaboration; Partnership; Alliances
7. Diversity Alternatives; Redundancies
8. Modularity Self-sufficiency; Devolution;
9. Social Cohesion Just, equitable rules, values ; Trust;
10. Boundaries / Limits Natural ,Social ; Rights / Entitlements

11. Flood Resilience - Social Sector; Pari People, South
Sudan

12. Flood / Earthquake Resilience - Economic Sector; Automotive
Companies
Nissan was able to localise the impact / quick recovery:
Vice-President Toyota “we intend to study Nissan’s approach to
see what we can learn”

13. Key Messages
 Social, economic, environmental risks are
interconnected
 Building resilience is best way to protect against risk
 Route to resilience is essentially the same for different
risks
 Disasters: Adversity into Opportunity
 Value of collaboration: State, private sector, civil society
 Cross-scale collaboration (balanced approach - top-
down / bottom-up)
 Think Global - Act Local
 Local people are primary stakeholders
 Starting point: understanding the local context

14. Key Challenges
> Trade offs: Short term Costs verses longer term
Benefits
> Threshold of acceptable risk
> Core business or corporate social responsibility ?
> Targeting the most vulnerable
> Changing the status quo
> Small scale extensive disasters
> How to systemise / share learning
> Incentives to operationalize resilience principles

15. Business Resilience
Overcoming vulnerability for competitive
advantage!
Elements of a private sector approach
Otto Kocsis
Principal customers - Business Interruption – Business Resilience
Corporate Engineer
Zurich Global Corporate

16. Loss lessons of disruptions
Disruption causes: 85% NatCat
11. March 2011
14. April 2010
© Zurich Insurance Company Ltd, Risk Engineering
August 29, 2012 Supply Chain Resilience 2011; Zurich/BCI/DHL/Chart.Risk Grading - Training + Supply
Business Interruption Inst of Purchasing 16

17. Cumulated Business Interruption-Losses
increased 2-times more than Property-Losses
962
900
BI
Loss Index (2005 = 100)
700
500
474
PD
300
100
01.2005 01.2006 01.2007 01.2008 01.2009 01.2010 01.2011 01.2012
© ZFS
Source: Large Loss Database, March 2012
Source Zurich GCiE Portfolio 2005-2012
INTERNAL USE ONLY 17

18. A Change in risk landscape
learned the hard way:
Interconnectivity/no buffers: e.g. customers with >1000
suppliers ~25% affected by Fukushima  >Mio 100 $ CBI
loss. … can not be managed after the event with business
continuity measures
Market Production requirements
characteristics
 Globalized,  Fragmentation of production to core
competitive markets competence around globe
 Lean supply chains / no buffers
 Innovation within supply chain/clusters
 Industry parks with blurring ownership
 Trendy products  Customized, big product portfolios
with short sales  Fast product life cycles
opportunities  Short time to market (2 weeks)
 volatile markets  Produce to order / market demand 18

19. Business has become global
Yesterday: Today:
Integrated production site Global, lean supply chains
with raw and finished stock with limited buffering capabilities

20. Lightning @ Philips Albuquerque
March 17 2000
Who Who
Nokia Ericsson
What What
RFC from Philips RFC from Philips
Small fire @ Philips caused supply Small fire @ Philips caused supply
shortage shortage
Result Nokia Result Ericsson
was proactive with Philips was reactive
actively identifies and buys RFC waits too long  no more spare
spare capacity in market capacity in market
did not suffer any production loss suffered severe production loss
fostered a strong market position retired from the mobile phone
business, until SONY arrived

21. From Property Protection
to Resilience in the Value Chain
Property Protection Business Continuity Business Resilience
Business Resilience
tech. prevention for Mgmt. processes + Mgmt. in value chain
Mgmt. in value chain
organizational recovery + Top-Down Approach
asset protection + Top-Down Approach
21

22. How to identify corporate exposures
How much resilience do we have / need?
1. Value chain model
$  Products/value creation
 Involved sites
 Inter-dependencies
2. Risks + consequences
$  Production capacity loss
(%)
 Outage (days)
 Alternatives (%, costs)
$ 3. Profit-Impact to Group
 Critical paths in value
chain
$  Efficiency of mitigation
measures
INTERNAL USE ONLY

23. Top down approach:
Reduction of total cost of risk at improved protection
Customer
High High
protection protection
High
protection
Suppliers Sourcing Production Distribution Clients
Analyzing risks along the value chain allows
top-down prioritization of the implied protection.
23

24. Strategies to foster Resilience
1. Know your value chain/creation & vulnerabilities;
learn from incidents, identify events early / be prepared with appropriate
level of reaction (BCM), targeted redundancy (Pharma)
2. Share assets (industry parks)/buffer stocks (Caterpillar),
share info on risks in value chain/production volume proactively,
keep IP/image
3. Innovate within supply chain to resilience (electronics),
foster strong relationship (clusters)
4. Connectedness: manage business together with risks, include risk
owners,
foster diverse perspectives, enable communication/information flow
5. Reduce complexity by postponement of customization (Benetton, Dell),
standardization of parts (electronics: Lucent)
6. Flexibility: Modularity (car platforms)/interchangeability (identical plants:
GM); collaborate for alternatives: Keiretsu
24

25. Resilience is …
 not an end of pipe – risk management solution
 but an intrinsic characteristic of doing business
Resilience as
 Capability to manage complexity in value chains,
beyond own company boundaries
 Competitive advantage
 Management task
 Innovation goal
… in a profit oriented, competitive environment!
25

26. Private sector-civil society partnership
opportunities for resilience building
Dr. Andrew Mitchell

27. Challenges that require partnership
• over 50% of people exposed to disaster risk
• $US380 billion damages from natural disasters alone
versus $US134 billion ODA 2011
• Unmet humanitarian funding worst for a decade
• Institutional development funding drops for the first
time in 15 years
• Funding on risk reduction = 4% of humanitarian and
1% of development finance
More needs, larger resource gaps, time running out!

28. What does resilience building mean operationally?
WEF, 2008

29. What does resilience building mean operationally?
Practical Action, 2011

30. The Sustainable Livelihoods Approach
DFID, 2001

31. Identifying the operational common ground
Private sector Common Features Civil Society
Primary generator of GDP
Local-level impact and
and employs the majority Adaptability and mobility
understanding
of the population
Collection and analysis of Ability to function in
Economic analysis,
first-hand data to insecure/highly political
modelling and monitoring
determine risk contexts
Dominant vehicle for
Able to address difficult
research, innovation and Ability to take risks
and political issues
investment
Organisation, management Influence on government Highly reactive in crises and
and large-scale capacity policy and planning emergencies
Public marketing and Training and local capacity Acceptance and trust from
awareness capacity building local communities

32. Identifying future common ground
•Aiming for the stability of a system subject to multi-hazards,
change and uncertainty: sustainable development vs stable
economic environment
•Looking beyond the timing of extreme events and disasters:
proactive investment of effort and resources around disaster
cycles
•Looking beyond local drivers to regional and global drivers of
risk: e.g. transfer of information and analysis from the global to
local scale
•Centralisation and coordination of action across sectors around
a common plan. Who is the catalyst for resilience?
•Better use and impact of resources in an environment of
increased competition (funding/resources vs markets)
•Standardisation of tools and cost benefit analysis

33. Private sector vision of action WEF, 2008
Private sector industry Role in resilience building
Assessment and evaluation of risk, insurance
Financial services, Insurance and reinsurance products for those at risk, key mobiliser
across industries
Engineering and Construction Land-use planning, building design and codes
Communications (ICT & Telecom) Risk monitoring and alert systems, education
Hazard-proofing, contingency plans,
Utilities and transportation
emergency management, logistics
Health (pharmaceuticals) Early warning, preparedness for epidemics
Irrigation, flood and watershed management,
Agriculture and Extractive industries
environment buffer zones
Manufacturing Supply chain protection
Supply chain protection, protection of local
Travel and tourism economy and environment, communication
capacity
Awareness of risk and solutions through
Media and entertainment
public media

34. Civil society vision of action
Key resilience building action Private sector partner
Scientific agencies and insurance
Risk assessment and analysis
companies
Banking and telecommunications
Social protection transfers
companies
Financial services and micro-insurance for Banking and credit agencies, insurance
those at risk companies
Land, sea and air transport companies,
Hazard-proofed logistics and supply chains
privatised utility companies
Engineering consultants, water supply and
Hazard-proofed water, sanitation, and
dissemination companies, building
shelter
construction companies
Food manufacturing, natural resource
Diversification of employment and food
extraction and infrastructure companies,
production, protection of ecosystems
tourism
Awareness raising and education Telecommunications companies, media
Human resources, training, and Management, human resource and
management capacities training consultants

35. Horn of Africa Risk Transfer for Adaptation
Integrated risk management, using participative risk analysis with
the community, manages both large-scale and local hazards.
Scaled up from 200 to 13,000 HH over three years.
1. Risk Reduction: improved agricultural practices, rainwater
harvesting, soil and water conservation techniques. Building on
the national social protection system (work for assistance on
community risk reduction projects).
2. Risk Transfer: Work for microinsurance, using weather-indexed
products for short- and long-cycle crops. Work feeds into
community risk reduction projects, richer farmers pay directly for
premiums.
3. Prudent risk taking: credit for livelihood diversification (honey
production), experimentation for new technology (high yield
seeds) and business opportunities (cash crops). Farmers willing
to take risks, whilst insurance acts as a guarantee for
banks/lenders. Premium holders access concessional loans.

36. Horn of Africa Risk Transfer for Adaptation
Oxfam, 2010

37. R4 Rural Resilience Initiative
Extension of Harita, Partnership with WFP funded by USAID, scaled up to
Senegal and another two countries, reaching half a million people over 5
years
4. Risk reserves: Promotion of savings
Oxfam, 2012

38. HARITA partnership roles
Civil Society/ Public sector/ academia/
Private sector
Community donors
Community and
LOCAL level Farmer’s Cooperative
Mekele University
Ethiopia’s National
Nyala Insurance
Meteorological Agency
Company
REGIONAL/ Relief Society of Tigray
NATIONAL level (REST) Tigray Regional Food Security
Dedebit Credit and
Coordination Office
Savings Institution (DECSI)
Tigray Cooperative Promotions
Office
Institute for Sustainable
Development
International Research Institute
Swiss Re
for Climate and Society
INTERNATIONAL
Oxfam USA
level Goulston & Storrs/ Weil,
Index Insurance Innovation
Gotshal, & Manges, LLP
Initiative at University of
California-Davis
Rockefeller Foundation

39. Conclusions
• Partnership is inevitable for PS and CS to negotiate the future
complex, uncertain and interconnected world. Scaling down
initiatives and impact to the local level is a key challenge.
• Both groups have individually developed conceptual and
operational visions of resilience that share significant common
ground.
• Both groups bring individual and common strengths towards
operational partnerships. Aligning efforts behinds a common
vision and clearly stated expectation is critical for both groups to
operationalise resilience building.
• PS-CS partnerships are already happening: building on
previous PPPs can create new opportunities and impact at the
local level

40. THANK YOU!

41. Plenary Discussion
• Q & A / Points for Clarification
• Constraints and Opportunities
• Top three recommendations to take forward
1. ..
2. ..
3. ..