OECD publication identifies measures to minimise economic and social damage and help economies recover rapidly after a disaster. It proposes a fundamental shift in risk governance, whereby risk management actors are encouraged, through appropriate incentives, to help boost resilience, rather than rely on government for post-disaster assistance. Further information available at www.oecd.org/gov/risk/boosting-resilience-through-innovative-risk-management.htm

1. BOOSTING RESILIENCE THROUGH
INNOVATIVE RISK GOVERNANCE
OECD High Level Risk Forum
Public Governance and Territorial Development Directorate

2. • Past decade: USD 1.5 trillion in economic damages from man-
made disasters (industrial accidents, terrorist attacks) and natural
disasters (primarily storms and floods)
Why boosting resilience matters
0
50
100
150
200
250
300
350
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
AnnualeconomiclossesinUSDbillion
Source: EM-DAT: The OFDA/CRED International Disaster Database, Université catholique de Louvain, Brussels, Belgium, www.emdat.be
(accessed 14 November 2013).
Economic losses due to disasters in OECD
and BRIC countries, 1980-2012 (USD Billion)

3. • Driven by significant increase in intensity and complexity:
o Increased concentration of populations , especially elderly, more vulnerable
groups, and economic assets in risk prone areas
o Accelerated urbanisation
o Increased global economic integration, facilitated by transport mobility and
communication
o Deteriorating environmental conditions coupled with climatic changes
Why boosting resilience matters
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Australia
Austria
Belgium
Canada
Czech Republic
Denmark
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Japan
Korea
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
OECDTotal
% of population aged 65 and over
2009 2050
Source: OECD (2009), OECD Factbook 2009: Economic, Environmental and Social Statistics.
0%
10%
20%
30%
40%
50%
60%
70%
80%
Luxembourg
Korea
CzechRep.
SlovakRep.
Ireland
Belgium
Netherlands
Hungary
Finland
Austria
Sweden
Estonia
Norway
Slovenia
Switzerland
Chile
Portugal
Denmark
Israel
Germany
Poland
Japan
France
Australia
Greece
UnitedKingdom
Mexico
Spain
Italy
UnitedStates
Turkey
Canada
NewZealand
Global value chain participation index
Source: Mirdoudot, S. and K. De Backer (2012), “Mapping Global Value Chains”.

4. • Some disasters caused economic losses in excess of 20% of GDP
(Chile, NZ), with local economies especially affected
• Shocks propagate across economic sectors and geographic
boundaries through interconnected economies
• Considerable uncertainty challenges good policy making for
resilience
Why boosting resilience matters
-10%
-5%
0%
5%
10%
15%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
AnnualRegionalGDPgrowth
topreviousyear
The impact of disasters on local economies
Abruzzo Queensland New York
9/11 Attacks
L‘Aquila Earthquake
6/4/2009
Queensland
Flooding
2010/11
Source: OECD (2012), Large regions, TL2: Demographic statistics, OECD Regional Statistics (database), accessed on
14 November 2013, doi: 10.1787/data-00520-en

5. Why boosting resilience matters
Disasters occurring in times of economic crises are
even more challenging for governments to deal with:
• Japan was struck by the earthquake in 2011 in the
midst of a restructuring programme – Japanese
economy contracted by 0.7% in real GDP and fiscal
deficit increased to 9.5% as a result of the disaster in
2011

6. Resilience is…
… the capacity of a system to absorb disturbance and reorganise
while undergoing change so as to still retain essentially the same
function, structure, identity, and feedbacks.
Source: OECD (2014). Boosting Resilience through Innovative Risk Governance. OECD Publishing, Paris.

7. OECD countries have made substantial
progress in achieving resilience…
Source: Source: EM-DAT: The OFDA/CRED International Disaster Database, www.emdat.be - Université catholique de Louvain - Brussels - Belgium". Data for
OECD and BRIC countries (1980-2012). Figures are shown true to the year of the event. OECD Stat National Accounts GDP per capita in US$, constant prices,
reference year 2005
Australia
Bangladesh
Bolivia
Chile
Costa Rica
Egypt
Estonia
Ethiopia
Fiji Finland
France
Germany
Greece
Haiti
Honduras
India
Indonesia
Iran
Italy
Jamaica
Japan
KenyaMadagascar
Malawi
Mexico
Mozambique
Nepal
Netherlands
New Zealand
Norway
Pakistan
Philippines
Poland
Portugal
Slovenia
Thailand
Turkey
United Kingdom
United States
Venezuela
Yemen
0.5
1
1.5
2
2.5
3
3.5
2.7 3.2 3.7 4.2 4.7
AverageDeathTollperDisaster1980-2013
(log)
Real GDP per Capita, Year 2010 (log)
Significant decrease in fatality rates from disasters with increasing income
1980-2013
OECD Non-OECD

8. • Improved disaster risk management framework
conditions:
o General level of social and economic welfare
o Facilitating institutional environment
• Concrete and successful disaster risk management
measures:
o Increased understanding of risks
o Central government leadership
o Mainstreaming of disaster risk management across public
policy areas
o High level of risk awareness and information sharing
OECD countries have made substantial
progress in achieving resilience…

9. … but considerable economic damages
challenge even highest income countries
Source: EM-DAT: The OFDA/CRED International Disaster Database, www.emdat.be - Université catholique de Louvain - Brussels - Belgium; OECD (2013),
“Gross domestic product (GDP) MetaData : GDP per capita, US$, constant prices, reference year 2005”, National Accounts OECD Statistics Database,
accessed on 14 November 2013, http://stats.oecd.org/

10. Significant gaps are made apparent
during disasters…
Storm Surge, Norfolk, United Kingdom, December 2013

11. … In protective infrastructure and its maintenance
(e.g. dam breaks during floods in 2002/13 in
Europe; great infrastructure destruction during
Great East Japan Earthquake in 2011)
… Lagging regulatory reforms
(e.g. building codes that are not adapted to new housing design -
in Italy L’Aquila 2009; rigidity in air safety regulations during
volcanic eruption in Iceland 2010)
… Lagging enforcement of regulations
(e.g. significant increase in population around the Vesuvius despite
known hazard exposure; informal construction of houses in Mexico
in risk-prone areas)
Revealing resilience shortcomings on
the part of the government …

12. … Private sector–gaps in business continuity planning
(e.g. large bankruptcy rate during Great East
Japan Earthquake 2011; UK floods 2007 –
average of 9 days of interruption);
… Individual households do not invest in self-protection
(e.g. 84% of population affected by UK floods 2007 believe nothing
they can do to protect better; only a fifth of population of Istanbul
took protective action after the Marmara EQ in 1999; in Germany
only 25% of HH insured against flood risk)
… Low levels of international collaboration
(e.g. lack of incentives to share information; lack of appreciation of
benefits of joint investments; diverging capacity levels across
borders)
… but also among non-governmental
stakeholders

13. Trust in government put to particular
test during disasters:
o previous neglects in resilience measures
has disproportionately negative effects on
trust in government
o Governments and also companies have to
react with drastic
measures to restore trust
(e.g. resignation of government officials in
charge)
o and implement expensive
spending measures,
e.g. bank liquidity injection
after 9/11; clean-up costs and
compensation funds
after Deepwater Horizon
… undermining trust
in government
Source: BP (2014), "BP ADS Share Price History", British Petroleum, http://ir2.flife.de/data/bp/hpl_us.php
(accessed 8 April 2014); McDermott, M. (15 November 2012), “BP will pay biggest criminal fine in US history
for Gulf oil spill”, Treehugger, www.treehugger.com/energy-disasters/bp-will-pay-biggest-criminal-fine-u-
s-history-gulf-oil-spill.html.

14. • Constraint resources
• Lack of awareness (households, private sector
etc.)
• Limited knowledge of resilience measures
among stakeholders
• BUT shortcomings in risk governance may be
an important and often overlooked cause
Why do resilience gaps persist?

15. → Risk governance mechanisms determine whether an
actor participates in putting resilience measures in place;
for example:
o Households may decide not to self-protect in
expectation of governments doing so for them
o Local governments may not build protective measures
as result of other jurisdictions benefiting but not
contributing to the costs
o Central government actors reluctant to invest in
resilience – ex-ante investments not visible and levels
of rewards low
o Countries may not collaborate because of
disincentives for data-sharing
o …
Why do resilience gaps persist?

16. • How to identify governance shortcomings and
addressing them?
→ Employ diagnostic framework that can
identify institutional barriers and realign
incentives
How to address governance gaps?

18. Policy Recommendations
INCLUSIVENESS Adopt a whole-of-society approach to engage all actors in strengthening
resilience.
RISK
OWNERSHIP
Emphasise the role of risk ownership by increasing risk communication, raising
awareness, engaging in risk dialogues among all stakeholders and owners and
managers of risks.
REWARDS Build a culture of rewards that encourages pro-active behaviour to
increase resilience.
TRUST Emphasize the role of trust already prior to disasters to avoid costly measures to
restore trust in the aftermath of an event.
COOPERATION Encourage joint action through international collaboration, public-private
partnerships and across governmental sectors and levels to address the trans-
boundary and complex nature of future risks.
SHARING Increase the collection and sharing of risk information by taking advantage of „Big
Data“. Triangulate information from governments and the private sector as well as
use crowding information from web-based sources.
MONITORING Ensure resilience measures adapt to changing risk patterns by monitoring
and evaluation risk trends and efforts based on a multi-hazard analyses.

19. OECD Council Recommendation on the
Governance of Critical Risks
Five Core
Principles
Establish a comprehensive, all-hazard and trans-boundary
approach to risk governance at the national level
Anticipate and build preparedness through foresight capacities and
financing frameworks
Raise awareness to foster whole-of-society investments in
prevention
Develop adaptive and inter-agency crisis management capacities
Include principles of good governance in risk management
decision-making including transparency, accountability and
continuous improvement

20. For further information please contact:
catherine.gamper@oecd.org