Issue Overview

Increasingly efficient production processes, vast supply chain networks and the geographical concentration of production create an environment vulnerable to the cascading effects of catastrophic risks. Economic losses due to natural disasters and extreme weather were estimated at US$ 366 billion globally in 2011, said to be the most expensive year of disasters in history.

Catastrophic risks are those that can result in substantial loss of life or livelihood, call an organization’s existence into question or cause significant environmental damage. Another essential consideration is the time frame for the onset of a catastrophic event: the concept of catastrophic risk should normally be applied to events that are relatively rapid in onset, although it may also be appropriate to include slow-burning and incremental events such as climate change. A more specific definition of catastrophic risk depends much upon the particular context or intended application. Catastrophic risks include a diverse range of events such as floods, pandemic infections, nuclear accidents, wars and economic collapse. Their likelihood and magnitude are difficult to predict but they tend to have a large-scale impact that seriously threatens vulnerable populations, human well-being, business operations and the functioning of government. 

Looking back at recent catastrophic events such as the Great East Japan Earthquake of 2011, the Thailand floods of the same year and Hurricane Katrina in the United States in 2005, multiple spillover points of failure and aggravating effects of events are evident. Such examples illustrate that a major disaster immediately affects not only the country where it occurs; through various interdependencies and networks, it affects numerous others.

Did You Know?

• In 2011, 332 natural hazard-related disasters killed more than 30,770 people worldwide, affected over 244.7 million others and caused US$ 366.1 billion of damages. A total of 101 countries were hit by these disasters, although only five countries accounted for 31% of the 332 disasters. 
• Between 1970 and 2010, the proportion of world population living in flood-prone river basins increased by 114%, and on cyclone-exposed coastlines by 192%.
• The risk of losing wealth in disasters is outpacing wealth creation. Since 1980, in OECD countries, the risk of economic loss due to floods has increased by over 160% and due to tropical cyclones by 265%. These losses are growing faster than GDP per capita. 

Quotes

“When there is a big disaster and the mitigation or disaster reduction measures fail, it makes the headlines and people are excited and a massive amount of relief flows into the affected area. However, when the disaster mitigation or disaster reduction measures are successful, there are no headlines. Success is not highlighted, which means that international attention and national budgets for such activities tend to decrease. And this is the irony of dealing with disasters.”
Satoru Nishikawa, Director of Audit, Japan Water Agency, Japan

“The private sector can respond very quickly, they can be very agile, they can assist the international agencies and the local governments and local communities. The added value of private-sector engagement is huge and it is surprising that it hasn’t been more involved historically.”
Peter Guthrie, Professor, University of Cambridge, United Kingdom

Further resources

Global Agenda Council on Catastrophic Risks Annual Report 2011-2012
Global Agenda Council on Disaster Management Annual Report 2011-2012
World Economic Forum Risk Response Network
Reliefweb

Calendar

Sendai Dialogue on Managing Disaster Risks
9-10 October 2012
Sendai, Japan

International Humanitarian Aid & Development Conference & Exhibition – DIHAD
25-27 March 2013
Dubai, United Arab Emirates

Global Platform for Disaster Reduction
19-23 May 2013
Geneva, Switzerland

4th Annual Meeting of the Centre for Risk Studies
17-18 June 2013
University of Cambridge Judge Business School, United Kingdom

Council Insights

The Global Agenda Council on Catastrophic Risks aims to enhance understanding of catastrophic risks and highlight innovative ways of managing them by drawing on the practices and experience of the world’s leading public and private sector experts, academics and the Risk Response Network of the World Economic Forum.

At the end of the last term, the Council on Catastrophic Risks merged with the Council on Disaster Management to take advantage of the synergy and complementary nature of the two groups. The close relationship between this Council and the Forum’s Risk Response Network will be continued in order to explore the contributions Council Members can make to advance the thinking on catastrophic risks and on the various phases of risk management, disaster risk management in particular.

For this new term, the primary goal of the Global Agenda Council on Catastrophic Risks is to gain a better understanding of such risks at the global, regional and local levels, to promote best practices aimed at building resilience and preparedness on response and post-disaster recovery. The Council has planned the following activities:

• Gather and share case studies of catastrophic risk management
• From those case studies, put in place a best practice manual and share it through workshops targeting key decision-makers
• Build regional public-private networks to promote interregional learning, starting with Latin America
• Create a process to assess the level of exposure and resilience of countries to catastrophic risks to increase awareness and help leaders make decisions on how to best manage them

Contact Information

Research Analyst: Daniel Akinmade Emejulu, Research Analyst, Global Agenda Councils, Daniel.Emejulu@weforum.org
Council Manager: Andrew Andrea, Associate Director, Head of Public and Government Affairs, andrew.andrea@weforum.org
Forum Lead: Elaine Dezenski, Senior Director, Head of PACI, elaine.dezenski@weforum.org