A hazard has numerous risks attached to it and can present itself in many forms such as natural calamity, technological crisis or man-made tragedy. Businesses could face technological disasters such as supply-chain interruption, building collapse, information technology failure, power disruptions etc. Likewise, massive earthquake, flood, landslide etc. could strike us in the form of natural disaster. Sometimes hazards could be accidental or human-induced such as fire, chemical spill, strike, blockade, riot, and as extreme as terrorism. Nowadays, increasing number of disaster is rapidly becoming a global phenomenon. We do not need to look elsewhere as we revisit a series of recent disasters that took place in our own backyard.
Escalating number of disasters:
Mid April 2014, a deadly avalanche on Mt. Everest killed over a dozen Sherpa guides. After a long dispute between the Nepalese government and the Sherpas, few of the insurance, compensation and safety related demands were met by the government. Foresight of the government and the relevant agencies would have made the aftermath a lot smoother as far as adequate insurance compensations for the deceased trekkers' families were concerned.
Around the same time, late April 2014, A landslide hit the tunnel of Upper Madi Hydropower Project (25 MW) in Sildjure VDC, Kaski district of Nepal. Over a dozen workers including a Chinese national were trapped in the under-construction tunnel. Three workers were found dead while rest were saved after a long and treacherous rescue efforts.
A massive landslide in Sindhupalchowk district of Nepal took hundreds of lives in early August, 2014. The Sunkoshi River and the roads were blocked in the region for weeks. Thousands of people in the region were affected and struggled for livelihood. The Sunkoshi Small Hydropower Plant (2.5MW) remained submerged underwater for weeks when the river rose up to 30 meters in height forming a pool of water following the landslide and river-blockage. The landslide triggered chain of events including loss of lives, properties, infrastructures, supply-chain and businesses in many sectors. Ministry of Home Affairs (MoHA) estimates that, between June and September, 2014, there were 265 dead, 256 missing and 157 injured due to floods and landslides alone.
Around mid-October 2014, cyclone Hudhud, hovering in Nepalese sky, claimed dozens of lives and left unforgettable scars in the domestic tourism circuit. Although storms and heavy rain caused by Hudhud was devastating in the Indian states of Orissa and Adhra Pradesh, the scale of damages predicted for Nepal was rather moderate at the time. On the contrary, by the time the cyclone reached the heights of Nepalese mountains, it triggered deadly snow blizzards and avalanches in the Himalayas. There were hundreds of trekkers (national and foreign) on the mountains while means of communication were mostly disrupted when the storm hit the region. It is apparent that the weather related information were not spread out in accurate and timely manner to the end users. The hydrological system in South Asia is strongly controlled by the Himalayas, which act as barriers for monsoon rains. The Hudhud's effects could have been expected (if not predicted) by the State and preparedness/response procedure (if it already had one in place) could have been followed to mitigate the loss.
Nearly 82 years after the mega earthquake of BS 1990, Nepalese were heavily shaken by the recent M 7.6 earthquake on Saturday, 25th April, 2015 at 11:56 NST and a major aftershock of M 6.8 on Tuesday, 12th May, 2015 at 12:50 NST. Although the earthquake-epicenters were located in Gorkha and Dolakha districts respectively, the devastations left around 9,000 dead, 23,000 injured and thousands homeless all over the country. As per the Post Disaster Needs Assessment (PDNA), the private sectors have sustained over three times in damages and losses i.e. NPR 540 billion compared to the damages and losses of NPR 166 billion incurred by the public sectors.
More recently, the economic blockade imposed by India is no less than a man-made disaster for the Nepalese people and businesses facing dire need of petroleum products and other emergency supplies. Besides day to day inconveniences faced by the people, thousands of private sector industries and businesses were shut down within a week due to inadequate supply of fuel and raw materials from India. The blockade has interfered with every possible socio-economic dynamics of the country including, transportations, schools, hospitals, offices, business, services, households, festivals, entertainment, etc.
The aforementioned events were devastating in many ways compelling us to ask important questions such as, “Are our politicians liable?”, “Did the government envision such dreadful consequences?”, “Were the businesses prepared?”, “What is their response or plan ‘B’?” Although, under normal circumstances, the probability of similar cataclysmic events repeating in the near future could be predicted relatively low but as we see, the consequences are certainly going to be catastrophic for people, businesses, communities and the country as a whole.
Flood, landslide and earthquake are some of the high risk natural hazards the nation is facing for a long time. Moreover, the businesses today cannot disregard other potential threats posed by fire, explosion, utility failure, communication breakdown, computer crash, equipment malfunction, operator error, terrorism, criminal activities or a blockade. Are our private businesses ready to face such painful surprises? How prepared are we to sustain and recover our businesses out of these catastrophes?
Disasters might occur locally but their effects can be sensed throughout the country if not globally. In March, 2011, after the Tohuku-Tsunami in northeastern Japan, 656 Small and Mid-sized Enterprises (SMEs) went bankrupt within a year. Surprisingly, only 12% of the businesses were located in the vicinity where the disaster actually took place. Rest of the businesses were scattered throughout the country and were bankrupted by indirect loss of supply-chain disruption caused by the tsunami.
We need not look further as these scenarios are largely shaping in front of us and as a matter of fact, quite frequently these past couple of years. An avalanche occurs in the remote slopes of Himalayas and we see thinning crowd of domestic and international tourists in our airports for months. A landslide occurs in Sindhupalchok district while people and businesses in the capital go panic due to elevated hours of load shedding and reduced supplies. Likewise, onset of political strikes in the southern belt can close down thousands of business all over the country within a week.
The rising frequency, ferocity and the extent of damages caused by natural disasters are not only threatening the growth of businesses but also questioning the sustainability of the entire country's economy as the disaster loss of the nation takes away a big chunk of GDP every year. When businesses are disrupted, it costs money. Lost revenues plus extra expenses means reduced profits. Insurance does not cover all the losses and cannot get back valued customers.
Role of private sector:
It is a prevalent norm around the globe that less probable threats such as natural & technological disasters or the issues pertaining to emergency preparedness for that matter get lower priority than most of other functionalities within a business organization. In a country like Nepal this seems even more evident due to the lack of adequate government policies, visionary business model and culture of disaster preparedness.
As an engine for economic growth, private sector provides employment, standard of living as well as socio-economic growth of a country. Private sector businesses should not ignore the fact that their productivity and services are closely correlated with the safety and well-being of employees, community and the country as a whole. On the contrary, more often than not private sectors long for profit at the cost of disaster preparedness, environmental impact, business resilience and safety of people.
Many times, we have experienced in the past that the Government of Nepal as well as private sectors are awake for a few months during the flooding season. Authorities, communities, business houses and others come forward with titbits which are labeled 'emergency response' and 'disaster relief' efforts in bits and pieces. After another few months the issues settle in oblivion as no sustainable effort is made for the recovery of people, community and businesses in the region. Although the efforts and contributions are highly commendable and encouraging, the targeted CSR (Corporate Social Responsibility) value seems to get diluted and become unsustainable over time from a comprehensive Disaster Risk Management (DRM) perspective.
Anticipating, mitigating and managing disaster risks should be a collective effort because when disasters strike, “Business as usual” is disrupted for all. Avoiding supply-chain disruptions and maintaining smooth operations are in private sectors’ interest while at the same time this could be motivated by the CSR principle of the company, eventually adding value to the business by creating loyal customers. Private companies could engage with their local or national communities, and undertake a systematic policy of ‘Giving Back’ to customers through DRM programs which would create a feedback loop resulting in long term customer loyalty, improved brand image as well as employee satisfaction.
In Nepalese context, policies look good on paper but commendable action is nowhere near to be seen. A consolidating national authority (such as National Disaster Management Authority; NDMA) and coordinated policies and efforts (comprising communities, private sectors, NGOs etc.) are still missing to prevent and mitigate the potential of loss due to natural, technological or human induced disasters. Current Government policies are largely focused on reactive approach mostly responding to disasters rather than proactive measures such as prevention and risk mitigation initiatives. Thus, systematically embedding and infusing DRM strategy into the national infrastructure development projects is critical if the country honestly envisions proactive as well as sustainable DRM in the country.
Witnessing series of disasters throughout the country, it is proven that economic and the humanitarian catastrophes are imminent following a disaster such as a massive earthquake, extended flooding, landslide or a blockade. Over the years, many independent humanitarian and development organizations have been propagating their DRR (Disaster Risk Reduction) efforts through public-private partnerships, awareness presentations, preparedness seminars, emergency response trainings and capability building workshops with a mission to achieve more resilient communities and safer societies around the country.
In today's world of supply-chain network, business sectors and livelihoods of people are intertwined so intricately that they have to support each other to survive and sustain. The government and the private sectors must work together to make the businesses & communities more resilient to future disasters. Hence the pressing need of public-private partnership for the risk prevention, emergency preparedness, and business continuity planning in the event of recurring disasters, natural or otherwise. At this juncture, it is high time now that the private businesses of Nepal should rightfully intervene for their own good and come together to join hands with the government as well as non-government agencies to increase their own disaster resilience and business continuity.
The author works as a PPP-Specialist for promoting Public Private Partnership for Earthquake Risk Management (3PERM) program at National Society for Earthquake Technology-Nepal (NSET). This article does not reflect the views of the organization.