PwC & UNISDR

1. Advisory PwC & UNISDR Driving sustainable growth & resilience By Oz Ozturk February 2014

2. Introduction 1 2 3 4 5 2 Setting the scene Collaboratingwith the United Nations, UNISDR Working with the private sector Somelessons The future The opportunity

3. Natural hazards are a growing concern for global businesses… Natural hazards 2011 – a global sample (…) Toyota, Honda Motor Co. and Nissan Motor Co. -- are losing 6,000 units of production daily (…) lost production may costmore than $500 million a month (…) Winter Storm Joachim – Dec France, Switzerland, Germany Wildfires –May Canada Severe storms, tornadoes – May US Flash floods – Nov France, Italy, Spain Hurricane Irene – Aug US, Caribbean Floods – Aug-Sep Pakistan Tropical Storm Washi – Dec Philippines Drought –Oct USA Floods – Apr-May US Wildfires – Apr-Sep USA Severe storms, tornadoes– April US Cyclone Yasi – Feb Australia Floods, landslides– Oct Guatemala Flash floods – Jan Brazil Floods – Aug-Nov Thailand Drought – Oct-Sep Somalia Flash floods – Dec-Jan Australia and one of the latest in Nov 2012 (..) Superstorm Sandy will end up causing about $20 billion in property damages and $10 billion to $30 billion more in lost business (…) UNISDR and PwC • Working together to reduce Disaster Risks (…)Tens of thousands of people have fled Bangkok, which accounts for 40 per cent of the nation’s economic output (…) (…)“the whole PC production chain is stuck at a bottleneck” because of the constraints on hard disc supply. (…)

4. With a significant socio-economical impact… Cumulated impacts of disasters since the 1992 Rio de Janeiro Earth Summit People affected Financial impact People killed 4.4 Billion 2.0$ Trillion 1.3 Million Top 3 disasters account for 80+ % Flood Drought Storm Storm Earthquake Flood Earthquake Storm Extr. temperature China 2.5 $bn India 938 $mio Bangladesh 136 $mio USA 560 $bn Japan 402 $bn China 331 $bn Haiti 230’675 Indonesia 185’152 Myanmar 139’351 Top 3 countries impacted Source: Physicalrisksfromclimatechange, DGA, LLC

5. Collaborative disaster risk management bears a multi-billion dollar savings potential • The costs of corrective disaster risk management are similar to the ones of climate change adaption and are estimated at USD 75-100 billion annually between 2010 and 2050. • If all the USD 1.9 trillion of FDI foreseen for 2014 were disaster-risk sensitive, this would represent critical exposure. Natural hazards: a multi-billion USD cost factor Investing today means making savings tomorrow 10:1 ratio - Private sector practice shows that for each 1$ invested in disaster risk management, there are potential savings of up to 10$ should a disaster occur. 63% of businesses see opportunities to generate value from disaster risk reduction.1 The potential of collaborative disaster risk management is widely untapped Our joint study ‘Working together to reduce disaster risk’ has shown that opportunities for the private and public sectors to collaborate on risk reduction and building systemic resilience are still largely untapped. Most corporate disaster risk reduction initiatives have been introspective and remained largely unshared. Similarly, governments, international organizations and NGOs have promoted initiatives without meaningful private sector involvement. 1Economist Intelligence Unit survey

6. Resilience VS Response ‘Pre’ disaster ‘Post’ disaster Information: Understand natural hazards & disaster risks Communication: Notification Resilience Response Immediate action, business continuity Impact Assessment Collaborate Collaborate Remediation Define scenarios Accounting: Capture and track ongoing expenses Strategy

7. Successful PPP in driving resilience has 3 major pillars:Creating awareness, Enabling exchange and Generating collaborative action • Creating shared awareness is an essential precondition for effectively channeling organizations’ DRM efforts towards collective action. Creating shared awareness means raising consciousness about the importance of carefully managing disaster risks and emphasizing possible ways and benefits of collectively addressing them. • Enabling exchange between community members means facilitating the sharing of information in the widest sense of the word: knowledge, know-how, experience, proven practice, insights and ideas. An open and ongoing dialogue is indispensable to sustain cohesion and to unveil opportunities for concrete collaborative action. • Generating collaborative action means guiding community members’ disaster risk reduction efforts around common initiatives. Only projects with tangible benefits can sustainably foster trust and credibility. Creating shared awareness “Shared benefits for shared investments”: Releasing the untapped potential of collaborative Disaster Risk reduction Enabling exchange Generating collaborative action

8. Our Initiative UNISDR • Strong link with private companies • Strong link with public organisations Private Collaboration • Expertise in corporate risk management • Expertise in public response to disaster risk management Public Driving sustainable resilience

9. Engaging the private sector to share best practices and create a holistic resilience strategy Key drivers of change 1 Disaster Risk Management Framework (‘DRM-F’) 2 Defining Business Strategy 3 ‘Working together to reduce disaster risk’ 4 Annual ‘GAR’ Report on Disaster Risk Reduction

10. Disasterrisks management framework • Storms and Hurricanes • Floods • Sandstorms • Extreme Heat and Cold and Droughts • Avalanches • Landslides • Earthquakes • Volcanic eruptions What How Hazard categories Geological Hydro-Meteorological Collateral damage Disaster risk categories Asset damage Activity disruption Understand Impact dimen-sions Human • Facility deterioration • Damage of transport vehicle • Supply disruption • Production bottleneck • Distribution failure • Oil spill • Release of chemicals DRM process Identify Environmental Assess Enable Financial/Operational Terminology Maturity model Proven practices Techniques DRM community Implement, monitor & report Reputational Sharing DRM strategies Avoidance Acceptance Reduction Respond& mitigate Private-Public DRM options Corporate Supply Chain Assets & Infrastructure Respond DRM drivers Governance & Organisation Technology • Asset emplacement • Asset securisation, e.g. earthquake resistant buildings • Business continuity planning • Alternative sourcing • Supply Chain continuity planning • Infrastructure development, e.g. shelters, damns • Development of rescue services • Educational measures to build understanding and awareness Toolkit

11. The objective To improve the management of disaster risks by business, for improved performance and for the benefit of the company’s wider relationships with suppliers, communities and markets By fostering dialogue and interaction between the private and the public sector By collecting and gathering knowledge, tools and good practice By setting up a link to the disaster risk community in the form of a platform of dialogue and exchange By developing a conceptual framework to manage disaster risks caused by natural disasters

12. Findings from working with the private sector Share Industry leading companies have set out their objectives and stepped up efforts to reduce disaster risks, but there is opportunities for improvement and know-how remains unshared Finding 1 Value Finding 2 ‘A widely untapped opportunity’ – Companies have developed know how, display a desire to share it and have a chance to collaborate with peers and the public sector to increase risk resiliency rather than acting alone Dependant Finding 3 Public and private sectors play an active role in addressing the challenges that hinder collaboration and in improving their ongoing DRM Holistic Finding 4 Collaborative DRM requires a common vision and the long term cultivation of broad based relationships

13. Case examples. – Development of an iPad application which displays a global heatmap of assets – One of our sample companies developed an application which displays the current level of compliance of each of its assets globally. The company used external help to identify the risks for each region where they operate, and has an independent entity conduct yearly audits of its operations. The site are encouraged to raise their compliance level through positive / negative incentives. Local collaboration with peers in the same industry – One of our sample companies identified the risk of fire as a major threat to one of their critical asset. This threat is shared by a peer in the same industry and both companies have agreed to collaboratively share resources in case of a fire. Working with local authorities to identify natural hazard risk exposure – One of our sample companies is working with public authorities to determine potential natural hazards risk. The company relies on public authorities input to develop working sites in certain regions and locally collaborates with them in case of a disaster. Preparation of ‘disaster kits’ and interest from local government – One of our sample companies prepared and shared ‘disaster kits’ in preparation for a major hurricane threat. The local government identified this as an outstanding idea and collaboratively worked with the company to extend the distribution of kits to the public. Hiring staff with a public crisis management background – Some of our sample companies started hiring staff with a public or military crisis management background to be best prepared in case of a disaster. 13

14. Case examples cont. – Reducing dependency on key suppliers – Some of our larger sample companies are increasing the supply chain flexibility by increasing supply chain flexibility or integrating critical suppliers. Collaboration with peers in the industry / region to send suppliers in an affected zone – Some of our sample companies are collaborating with peers to concentrate supplies in the few available transportation means in order to send suppliers in affected zones. Preparation of ‘one pagers on country risks’ – One of our sample companies has developed a database containing ‘one pagers’ of risks in each of the countries they operate in. These risks are identified by local operations and the global headquarters reviews the one pagers periodically and defines actions accordingly. Transferring work to other sites – One of our sample companies set up a business continuity plan which allows to offload work to other sites if one of their operations is hit by a disaster. Remote access to work – Some of our sample companies provide the tools and developed the necessary processes for employees to be able to work remotely in case access to the office is impossible. Getting to know public authorities – Some of our sample companies get to know public authorities and stress how critical it is to know your counterpart in order to collaborate in case of a disaster. Scenario planning – Some of our sample companies in Japan have started to collaborate with the government and are running scenarios to define the processes and standards which will lead to create minimum level of service (telecommunication, energy supply, lifeline services) which are necessary during a disaster. 14

15. Somelessons to share • Collaboration equalsearly and continuous engagement • Privatesectorsspeaks a differentlanguage to Public organisations • Horizons of investment are long whereas Mr Marketshortsighted • Transfer of riskis a greatconcern • Currenteconomic drivers do not drive resilience • Regulatory contraints hinder collaboration • We have a tendency for amnesia as a species • PPP tends to focus on financialfunding not holisticresilience

16. The future, comingsoon

18. The R!SE Initiative The overall objective of the R!SE Initiative is to make all investments risk-sensitive. The R!SE Initiative is an ambitious global response to a daunting global challenge. What It is a new way of collaborating, on a global scale, to unlock the potential for public and private sector actors who are ready and willing to make a step forward and take leadership on disaster risk reduction. By bringing together 6 connected communities • R!SE aims to convene stakeholders who have the ability and resources to influence the future direction of DRM. • Business, Investors, Insurers, Public Sector, Education professionals and Civil Society. How The United Nations Office for Disaster Risk Reduction (UNISDR) and PwC, the founding members, join with: • The Economist Intelligence Unit (EIU) • Florida International University (FIU) • Principles for Responsible Investment (UNPRI) • AECOM • Willis • as well as other companies and institutions to build a broad alliance to support the R!SE Initiative. Who

19. “The more governments, UN agencies, organizations, business and civil society understand risk and vulnerability, the better equipped they will be to mitigate disasters when they strike and save more lives” Ban Ki-moon, United Nations Secretary-General – 17