Asian nations 'face greatest natural disaster risk'
August 15, 2012
Emerging economies in Asia, including India and the Philippines, face the greatest financial risk from natural disasters, an analysis suggests.
The authors based their rankings on nations' economic activity and exposure to natural hazards, such as floods, droughts, earthquakes and cyclones.
The nations' limited ability to recover from disasters left them exposed to severe disruption, they added.
Risk analysis firm Maplecroft compiled the Natural Hazards Risk Atlas.
Last year was deemed to be the most costly 12 months on record for natural disasters, costing US $380bn (£242bn).
The main reason for the spike was the earthquake and tsunami that struck Japan in March 2011, which was estimated to have cost US$210bn.
A region's risk of flooding is one of the natural hazards considered by the ranking
The authors said that the world's key growth economies were among those most exposed to risks related to natural hazards.
"China, Mexico, India, Philippines, South Korea, Indonesia, Turkey, Bangladesh and Iran are each heavily exposed to major destructive natural hazards, such as earthquakes, flooding and tropical cyclones," they wrote.
"Businesses operating in, investing in or sourcing from emerging economies are therefore particularly exposed... and need to build their resilience to mitigate the disruption and impact of an event."
Lead author Helen Hodge, an associate director at Maplecroft, said Asian economies - particularly those located in the
south-east of the continent - faced a variety of potentially devastating hazards.
"The Pacific Ring of Fire is a belt of seismic risk that draws in Indonesia, Philippines, Japan and Taiwan etc," she told BBC News.
"So that exposes these nations to seismic risk, and high risk from earthquakes, but also - as we saw in Japan - the secondary risk of tsunamis.
"This combined with the hydro-meteorological risks. For example, along the Mekong Delta, we do see very high flood risks.
"There are the drought risks as well when we see Monsoons failing or arriving late.
"It is not really one risk in particular but it is the combination of multiple risks that are prominent in the areas."
Ms Hodge explained that in order to create the atlas's maps and rankings, the authors assessed the underlying risk from 12 natural hazards and then compared this with economic output.
The impacts from extreme weather events, such as drought, are projected to get worse in the future
"In order to look at economic output, we use a technique where we look at night-time lights, and then distribute economic exposure according to night-time lights," she added.
"This is based on research that shows you tend to get concentrations of economic exposure coinciding with bright lights.
"We then used [Geographic Information System] techniques to effectively map the different data across each other, so where does the seismic risk lie? Where does the tropical cyclone risk lie?"
Although the report identified Japan, the US, China, Taiwan and Mexico as the nations having the highest economic exposure to natural hazards in absolute terms, the authors said the huge economies had the capacity to recover relatively quickly.
This was a result of a high degree of resilience, such as established infrastructure, disaster preparedness and tight building regulations.
"A way to explain how this might differ is by looking at somewhere like the US, where clearly down the west coast and alongside the east coast, you have got major concentrations of economic output hazards - earthquakes on the west, and hurricanes on the east," observed Ms Hodge.
"That alone is going to drive the US into high rankings for absolute economic exposure.
"However, if you look at that as the wider relative economic output - because there are concentrations of economic exposure in places like the mid-west that are not as heavily exposed to this risks - this has a balancing effect."
"[But] when you consider that the Haitian earthquake in 2010, if you look at the proportion of the Haitian economy that was exposed to that earthquake, some of the upper estimates was close to the nation's annual GDP."
Map showing the economic exposure risk of Asian nations in 2012