Private sector investments could play a major role in disaster risk reduction worldwide, as damage from natural disasters cost almost 190 billion dollars each year, according to a new United Nations report released Wednesday.
The Global Assessment Report on Disaster Risk Reduction found that cooperation between businesses and governments to manage disaster risks can lead to better investments, more resilient infrastructure and faster recovery after disasters.
With up to 85 percent of investments made by the private sector in most economies, disaster risk reduction needs to become a main factor for companies, especially as many multinational organizations depend on goods manufactured worldwide, sometimes in high-risk regions.
UN Secretary General Ban Ki-moon welcomed the initiative pointing out that the true cost of damage by natural disasters has been underestimated by 50 per cent, estimating the cost at 2.5 trillion dollars this century alone.
"Economic losses from disasters are out of control," Ban said. "They can only be reduced in partnership with the private sector ... For too long, markets have placed greater value on short-term returns than on sustainability and resilience."
Ban said that the private sector should share the burden of disaster management, which has so far fallen on governments.
The report recommends that companies take the risk of natural disasters into consideration and also invest in preventative measures such as strong infrastructure and well-planned urban development.