Is There a ‘Business Case’ for Disaster Risk Management?

The challenge often, however, is the lack of attention to disaster risks in a more systematic way with a medium to long-term perspective, so-called disaster risk management (DRM). This is where the MarketMakers project [1] saw an opportunity to meaningfully contribute to the flood recovery effort in Bosnia and Herzegovina.

A viable business case for DRM?

DRM combines different measures of prevention, mitigation and preparedness to reduce and manage disaster risks; it involves government, the private sector and civil society in the process. In fact, efficient DRM shows that efforts to decrease/limit disaster risks are investments not only in preventing future losses, but also in stimulating future growth.

Using a systemic approach, the MarketMakers project thought that ensuring business and customs clearance zones are better protected against floods means economic activity can continue even if natural hazards strike again. Furthermore, improved protection of business zones will attract more businesses, revitalising economic activity in and around the zones.

The goal was to use an infrastructure-related DRM intervention as an entry for bringing together relevant stakeholders from the government, private sector and civil society to strengthen their awareness and understanding of DRM.

Ground work for the business case

The first step the project took was to organise preparatory meetings with municipalities to gather ideas and assess their willingness for cooperation. Municipalities were asked to develop proposals on how to improve protection against floods in areas with high economic activity, and were encouraged to seek contribution from local businesses. This helped establish a strong relationship with local governments; it also allowed to assess how proactive and committed they were.

This was not an easy task – there was only limited coordination between different levels of government in identifying priorities and defining roles. The project had limited time to design and implement the planned activities; finding committed ‘drivers of change’ was therefore a key part of the process. The proposed DRM interventions were selected through the evaluation of potential for risk reduction to ensure business continuity and to finally secure jobs; the size of the potential impact; compliance with regulatory and legal preconditions; and how quickly the interventions could be implemented.

The business case for ‘building back better’

Simply rebuilding infrastructure to pre-disaster standards does not reduce the risk of future devastation. Reconstruction therefore must aim to improve, taking measures to reduce previous vulnerabilities and exposure.

Rehabilitating the customs terminal building in Domaljevac-Šamac, for example, was based on the build-back-better principle, ensuring the reconstruction process included measures to minimise vulnerability to future floods. The municipality placed storage shelves and main power cabinets at a higher level, cleaned the water collection canal that surrounds the building, and elevated the walkway around the terminal, creating an additional barrier against future flooding.

The safer working conditions generated response from businesses: seven companies (such as a post office, restaurant, and freight forwarding companies) have moved back into the building, providing support services to the 18 companies located in the customs terminal area. The return of businesses not only sustained [2] 22 jobs in the building, but also 41 jobs in the entire terminal. The companies, moreover, reported a boost in business activities. They have witnessed a 10% increase in the number of customs terminal users, resulting in four new jobs in the terminal.

Investing to reduce the risk of flooding in business zones

The project encouraged municipalities to seek more involvement and input from tenant businesses. While this collaboration may appear straightforward, in reality the business community and local governments usually do not interact closely – an unfortunate shortcoming.

It is therefore worth noting how well the municipalities incorporated input from the business communities. In Gračanica, for instance, the business community identified the reconstruction of elevated connection road that at the same time also served as protection flood dam within the business zone as a critical investment. Similarly, the DRM investments in Orašje and Tuzla were implemented after consultation with the tenant businesses that recognised the importance of risk reduction measures (for their business continuity). This interchange ensured that the infrastructure investments were truly relevant.

The project also sought to promote understanding among municipalities that DRM investments are a means to sustain and spur economic growth and employment. In Gračanica, the improved flood protection measures of the business zone led tenant companies to expand their businesses. The company RPC Superfos, for example, built a new production facility, creating an additional 40 employment opportunities. Moreover, seven new companies requested to move into the zone, which is expected to create another 50 jobs. Relatively simple DRM infrastructure investments can therefore be catalytic in terms of promoting future growth and employment.

Stimulating continuous dialogue through platforms

To inculcate a better understanding of DRM among municipalities and the private sector, the project organised a series of DRM workshops where all stakeholders were able to voice their concerns and suggestions.  For example, companies proposed that the governmental civil protection service should take a more active role in promoting DRM and regularly visit companies to provide expert advice on DRM. The companies identified the need to build the capacities and improve the resources of the civil protection service and fire departments to meaningfully contribute to effective and coordinated preparedness capacities to respond in case of disaster events.

Most critically, this engendered the idea of joint collaboration to mitigate disaster risks. Businesses and municipalities have since worked together to undertake tangible activities, new investments and entrepreneurial initiatives. Creating  a space for businesses and government representatives was recognised as crucial to openly exchange ideas, concerns and experiences – potentially also bringing on-board more stakeholders and disseminating experiences to other municipalities and develop joint solutions.

Key takeaways

The creation of a fully functional DRM system in targeted municipalities was well beyond the reach of the project. It is still too early to fully assess long-term changes. The real test of long-term and large-scale change is the improved understanding and implementation of DRM in non-target municipalities.

However, the intervention demonstrated that there is a business case for DRM in economically important areas: integrating DRM into investments supports economic growth and employment. The DRM intervention, moreover, fostered greater cooperation between the municipalities and businesses, leading to improved economic governance. A number of key lessons can therefore be drawn from MarketMakers’ DRM intervention:

Allowing for flexibility: Continuous engagement and discussions with the municipalities and businesses meant that the interventions were constantly adapted in the planning phase. This flexibility assured proper identification of key DRM challenges and the design of appropriate and well-planned solutions.

Aligning interests: The DRM interventions led to tangible results because they addressed the interests of both the local governments (safeguarding business zones to attract more tenants) and the private sector (continued business activity). The project recognised and capitalised on these interests to motivate all relevant stakeholders into action and understanding of the need to consider DRM aspects for a long-term planning to save guard investments.

Combining hard and soft interventions: Using tangible, hard infrastructure interventions as entry to generate interest and ownership for DRM awareness raising proved particularly efficient. It provided the platform upon which more DRM discussions were launched.

Facilitation is key: Rather than using a top-down approach of telling municipalities what they should do, MarketMakers continuously discussed and exchanged ideas when developing the respective DRM interventions. This process of cultivating a shared vision was a major factor in the success of the intervention.

 Additional sources

• The business case for disaster risk reduction
• Reality check: applying a systemic approach in a fragile context
• On systemic approach: what it is and what it is not
• Swiss NGO DRR Platform
• SDC Disaster Risk Reduction Network

[1] MarketMakers is the project of the Swiss Government implemented by Helvetas and Kolektiv d.o.o/Posao.ba

[2] Sustained employment means that jobs were not lost