A Frenemies’ Guide to Risk and Reward

Last month, I was invited as a private-sector representative to participate in a United Nations International Strategy for Disaster Reduction preparatory conference in Geneva.  The meeting was focused on preparation to improve the Hyogo Framework for Action 2005-2015 at the 3rd World Conference on Disaster Risk Reduction (WCDRR) — an international meeting to be held in Sendai, Japan, from 14-18 March 2015.

The discussion focused around increasing the valuable and catalytic role that public-private partnerships can play in guiding smarter investment decisions and increasing the capital available for key infrastructure development.  We spent a great deal of time on the topic: “Can private-sector investments in disaster resilience make good business sense?

The business representatives, including myself, agreed that the answer is yes, but it is neither simple nor easy.  The lack of trust and transparency that permeates relationships between government, civil society and business creates a significant barrier.  In many circles, the notion that making a profit is essential is viewed with suspicion — understandably so, where there has been a history of corruption.  However, we agreed that an enabling regulatory environment, where rules are enforced, facilitates a working environment where risk can be shared equitably and dramatically increases the opportunities for return on investment.

This fits with AECOM’s understanding that progress is not possible unless three elements align.  Projects have to be technically feasible, economically viable and politically acceptable.  The relationships between these considerations are in constant flux but to act, to bring the major stakeholders together in action that will reduce risk, we must find a balance that is acceptable to all parties.  Something that is technically feasible but not economically viable has no chance of success.  Something that has political support but is unaffordable will not do.

This is good news and there are some excellent examples of smart public-sector risk management in countries like the Netherlands, Peru and Mexico. The Peru example is particularly illustrative as it acknowledges the interrelated consequences of disaster impacts. Peru’s Climate Change Adaptation Program (PACC) focuses on water resources, disaster prevention and food security in the vulnerable Andean Highlands, home to a high proportion of impoverished communities. The interdisciplinary program builds upon local, indigenous and scientific knowledge to introduce measures such as increasing the number and size of water reserves, introducing crops capable of withstanding extreme weather conditions, and integrating specific disaster-prevention measures into regional planning.