A new country level study on the economic exposure to natural disasters from risk analysis and mapping firm Maplecroft, suggests that while the U.S. and Japan have the highest economic exposure to natural hazards, it is actually the emerging economies of China, India, Philippines and Indonesia that pose the greatest threat to investors due to a lack of capacity to combat and recover from major natural disasters.
Maplecroft published their Natural Hazards Risk Atlas 2011 (NRHA) yesterday and it shows that while these emerging countries are at high and extreme risk of economic losses from natural disasters such as earthquakes, tsunamis, floods, droughts and tropical cyclones, they also lack the ability to mitigate the disruption that major disasters would have on their economies.
Out of 196 countries assessed for the atlas, the U.S. (1), Japan (2), China (3) and Taiwan (4) were the only countries to deserve the categorisation of ‘extreme risk’ for their absolute economic exposure to natural hazards. The emerging economies of Mexico (5), India (6), Philippines (7), Turkey (8) and Indonesia (9), are classified ‘high risk’ and feature in the top 10. Italy (10) and Canada (11) are the only other countries rated as ‘high risk.’
Economic exposure does not give us the full picture of the potential impacts though, say Maplecroft. The resilience and ability to recover, rebuild and reorganise also needs to be considered and heightens the risks faced by the emerging economies. The US and Japan are rated as ‘low risk’ in Maplecroft’s Natural Hazards – Socio-economic Resilience Index, whereas China, India, the Philippines and Indonesia feature in the ‘high risk’ category.
While the U.S. and Japan have an extreme level of economic exposure they also have the ability to recover and rebuild rapidly after natural disaster events, their soci0-economic resilience allows them to withstand events. The emerging economies do not have this socio-economic resilience, meaning that the knock on effects over a period of years to the global economy could be greater from a major natural disaster in China, for example, rather than in the U.S.
You can access the full Natural Hazards Risk Atlas 2011 on their website.