Emerging Markets Could Be Devastated By A Literal Perfect Storm
Several emerging markets remain highly vulnerable to a large weather event turning into a natural disaster, according to a new report by the risk analysis company Maplecroft.
And given that NASA predicts a future of increasingly extreme weather events, countries better get on it.
Maplecroft's 2013 Risk Atlas atlas ranks 197 countries on their physical and economic exposure to 12 different natural hazards (e.g. flooding, tropical cyclones, earthquakes), as well as their resilience to the socio-economic impacts of a destructive natural event.
The countries with high (but not extreme) resilience risk — i.e. those in which a natural hazard can quickly become a costly natural disaster — include several emerging markets in Asia: Bangladesh, India, Indonesia, the Philippines, Vietnam, and China.
The analysis notes that China and the Philippines (followed by India and Indonesia) "have the most globally significant concentrations of economic assets exposed to major natural hazards."
To demonstrate the impact of resilience, Maplecroft compares the effects of Hurricane Sandy hitting America's east coast and Typhoon Bopha hitting the Philippines.
Despite Sandy's strength and size, only 110 people died because the U.S. has a well developed infrastructure and communications networks in addition to sophisticated response protocols.
Typhoon Bopha, on the other hand, resulted in more than 1,000 deaths even though fewer people were exposed to the storm’s path.
Furthermore, the U.S. federal government was able to authorize $51 billion in disaster relief despite Congress being in a deficit showdown.
So even though 2012 was the least deadly year for natural disasters in the last decade — less than 10,000 people died worldwide — the analysis recommends that governments, communities, and businesses actively invest in disaster risk reduction as emerging markets become increasingly integral to the global economy.
“With the increasing global economic importance of these nations and their interconnectivity to global markets, a major event in one these financial centers increases the risk of economic contagion,” Helen Hodge, Head of Maps and Indices at Maplecroft, said in a statement. “In particular, a limited resilience capacity to ‘bounce-back’ from disasters will amplify this risk and prolong economic down-time.”