Zurich says Covid-19 highlights weakness of disaster risk management

Disaster risk management is falling behind the growing threat of natural hazards and other major events, according to Zurich’s latest resilience report, which stresses that the cost of responding to events such as Covid-19 is far greater than investment in upfront mitigation. Zurich adds that Covid-19 is a timely reminder that risk radars must be constantly updated or businesses face being steamrollered by events and disasters. Using post-event review capability (PERC), Zurich’s report finds that investments in disaster prevention tend to be directed towards protecting physical structures. But it suggests that holistic disaster risk management, such as environment planning and greener solutions, would be more effective. Zurich says the Covid-19 crisis has highlighted the danger of not taking action to properly mitigate risk before disaster hits. “We discount dangers that are not happening now and don’t devote either sufficient time or resources to grasp the obvious mitigation opportunities for even the most existential risks to human life on our planet,” the report states. Adding: “Preparedness was proved in many cases to have been inadequate, despite the widely accepted belief that a pandemic would likely occur at some point. The role of upfront investments compared to running operation costs is a recurring topic of post-event reviews.” In listing findings from its own PERC analysis, Zurich says the number one lesson is that just because an event has not happened yet in a particular location, do not assume that it could not. Zurich adds that language is important in disaster risk management. It says, for example, people should understand that a one-in-100-year event means there is a 1% chance of such an event occurring each year, but that experiencing back-to-back 100-year events is not unusual. At the same time, Zurich says it is inadequate to only focus on precedented or statistically calculable 100-year events. “We are increasingly building up assets in known risk areas at the same time that climate change is changing the frequency and intensity of climate-hazard events. We need to recalculate our financial and human risk profiles to reflect our new realities,” the report states. It adds that a “black swan” event is used to explain away unpreparedness, but these are actually rare or extreme events that are probable and should be planned for. Zurich also warns that extreme or major events do not occur in isolation. Its PERC studies showed that societies can be vulnerable to repeat events and can still be recovering from one event when the next one strikes, as seen with Atlantic hurricanes and California’s wildfires. Zurich adds that Covid-19 has also shown the full interconnectivity of risk. “The Covid-19 crisis has removed any doubt about the importance of understanding supply chain vulnerabilities and interconnected risks,” Zurich notes, adding that the pandemic revealed weak spots for many businesses and organisations. Zurich’s PERC risk management recommendations are: Focus on prevention as a more effective risk management approach than recovery. Build resilience through strong response and building continuity plans. Understand high-value supply chain vulnerabilities and interconnected risks. By managing these risks, companies reduce the chance that a disaster will cause unexpected ripple effects that could shut down operations. Stress employee preparedness at work and home, to keep employees safe and a business able to continue from a remote location. Review insurance coverage. Proper multi-hazard coverage will speed recovery and allow businesses to be up and running faster, which means retaining a customer base. Conduct a post-event review if disaster strikes. Lessons from what worked and what did not will better prepare the organisation for the next disaster, should it occur.

Zurich says Covid-19 highlights weakness of disaster risk management

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