Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than...

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www.pids.gov.ph 1 Philippine Institute for Development Studies Surian sa mga Pag-aaral Pangkaunlaran ng Pilipinas Sonny N. Domingo Marife M. Ballesteros Building Resilience of Philippine MSMEs to Natural Disasters

Transcript of Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than...

Page 1: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

www.pids.gov.ph 1

Philippine Institute for Development StudiesSurian sa mga Pag-aaral Pangkaunlaran ng Pilipinas

Sonny N. DomingoMarife M. Ballesteros

Building Resilience of Philippine MSMEs to Natural Disasters

Page 2: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Philippine Disasters

Page 3: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Philippine Disaster Profile

Situated in the typhoon belt of the western pacific, averaging 20 typhoons every year, 5 to 9 typhoons of which make landfall and incur significant damage

Lies within the pacific ring of fire with 25 active volcanoes

With earthquake threats in known fault lines affected by tectonic movements

Page 4: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Philippine Disaster Profile

More than half of the world’s intense natural disasters occurred in the Asia Pacific Region between 1975 and 2012 (EM-DAT 2013).

Philippines is ranked as the third most disaster-prone country in the world (World Disaster Report 2012).

The global climate risk index also ranks the Philippines as second most affected by the impacts of weather-related loss events (Germanwatch 2014).

Page 5: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

SMEs vulnerability to natural disasters

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Resilienceis “the ability to resist, absorb, and recover from the effects of a hazard in a timely and efficient manner”UN International Strategy for Disaster Reduction

Business continuity is concerned with enterprise operations in the immediate aftermath of disaster events.

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Frequency and cost of natural calamities in the Philippines from 2009 to 2012

Note: * in ‘000 US Dollars Source: EM-DAT: The OFDA/CRED International Disaster Database (2013)

Page 8: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Why SME Resilience to Natural Disaster Matters

APEC member countries collectively are prone to intense natural disasters

Disasters are bad for business; SMEs are mainly affected with high probability of failures

SMEs are the engines of growth and employment in many parts of Asia

SMEs failures can disrupt the entire supply chain. SME resilience means a resilient supply chain.

Page 9: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Elements of Supply Chain Resilience

•Individual/organization vs relationship/supply chain resilience

•Climate proof infrastructure

•Continuous availability of IT systems and data

•Planned and adaptive resilience capabilities

•Resilient supply chain begins with resilient citizens and employees

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Source: DTI

FIRM CLASSIFICATION MSME PROFILEMSME EMPLOYMENT

MSME Facts and Figures

Page 11: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Firm Classification and number of firms by employment size

Source: DTI

MSME Facts and Figures

Page 12: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Philippine MSMEs VulnerabilitiesThe literature says MSMEs lack the organizational slack to implement resiliency measures

Source: DTI

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• MSMEs are highly concentrated in the NCR(211,974) and CALABARZON (122,562), CentralLuzon (83,279), Central Visayas (50,078) andWestern Visayas (47,166).

• Many MSMEs are located in high risk areas;provinces with high frequency of typhoons

- ie. Pangasinan and Nueva Ecija, where about40,000 MSMEs (or 5% of total MSMEs) arelocated

• The frequency of typhoon and heavy rainfall issignificant in NCR and CALABARZON; tworegions with the highest concentration ofMSMEs.

Page 14: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Damage and Losses from Typhoons Ondoy and Pepeng for the Enterprise Sector, by Type of Firm (in Php million)

Page 15: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

•Typhoons Ondoy and Pepeng in 2009 caused a total of PhP 111.4billion in damage and production losses in the enterprise sectoracross the NCR, CAR, Region I, Region II, Region III, and RegionIV-A.

•Foregone revenues valued at PhP88.9 billion accounted for 80%of total damage and losses, mostly coming from the wholesaleand retail trade subsector.

- Largely due to damaged inventory buffer stocks for theChristmas season (worth Php 77.3 billion) caused by theflooding that affected 40,698 establishments engaged inwholesale and retail trade of which more than 50% are microenterprises

Page 16: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Impact on Livelihoods and Income Losses from Typhoons Ondoy and Pepeng in 2009, by Sector

Page 17: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Damages from Typhoons Pablo and Sendong for the Livelihood Sector (in Php million)

Page 18: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Post-disaster Coping Mechanisms and Recovery Efforts

Typhoon Coping Strategies

Ondoy and Pepeng • Remittances used for immediate reconstruction and rehabilitation needs by households and businesses

• 13% of micro-entrepreneurs recover lost incomes from remittances and loans/gifts from relatives

• 11% will refinance losses thru moneylenders

• People took temporary jobs where available

Sendong • Shift to different livelihood (e.g. from sewing or tricycle livelihood to retailing in informal markets or in evacuation/transitional camps

Source: PDNA Volume II-Ondoy and Pepeng, 2009;Tropical Storm Sendong PDNA 2012

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Developments in Philippine DRRM

Well developed policy framework and action plans for DRRM

₋ Philippine DRRM Act of 2010 ; National NRRDM Plan

₋ Climate Change Act of 2009 ; National CC Action Plan

₋ People’s Survival Fund of 2011

Provision of Policy Framework for SME promotion and development

₋ Magna carta for SME

₋ Barangay Micro Business Enterprises Act

₋ MSME Development Action Plan (2011-2016)

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Disaster Risk Reduction and Management (DRRM)

DRM Framework

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DRM Framework

Source: OCD/NDRRMC

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DRM Framework

Source: CCC

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Disaster Assessment and Support

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Area BCM (on pilot stage in CALA and Metro Manila area)

₋ Framework for the direction of action of an industrial agglomerated area

₋ By the Local authority / central government authority/ management organization of Industrial Estates

Albay Public Safety and emergency Management Office (APSEMO)

₋ local initiative of Area BCP

₋ Cover households and local businesses

₋ Encourage local businesses to develop contingency/continuity plan

₋ Applies vulnerability and hazard maps to land use zoning

Developments in Philippine DRRM …….. (2)

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Developments in the Philippine DRRM…..(3)

Project Noah ₋ public private sector partnership targeted to flood prone areas

₋ Corporate Network for Disaster Risk (CNDR) as government partner

₋ Capacity building of local government and community and development of barangay level DRM Action Plan

₋ Have been operationalized in 8 barangays, 3 cities, 1 province

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Gaps in DRRM for Philippine SMEs Lack of translation of national policy into local and sectoral plans

₋ MSMED not referenced to DRRM

The DRRM plans operationalized primarily for search, rescue, evacuation , relief operations

₋ Restoration of economic activities handled only in the medium to long term as part of the rehabilitation efforts

Absence of strategic programs to operationalize action plans for SMEs

₋ No small business development centers to address disruption and needs

₋ Absence or insufficient recovery funds for farm based and urban based small industries (loan and grant)

₋ Protection of workers

Area BCM limited to pilot areas and to few committed LGUs

Need to develop/improve effective partnerships with key stakeholders for DRRM

Page 27: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Recommendations

Help build organization resilience

• Revised Magna Carta for SMEs and BMBEs and MSMEDevelopment Plan to incorporate DRRM for SME

• Scale up Area BCPs and practice disaster adaptabilityamong SMEs

• Planned and adaptive resiliency

Promote organizational commitment to employeeswelfare in the event of disasters

• both for private sector and government

Page 28: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Recommendations

Set up pre-disaster agreements and promote infra resilience

•Dysfunction of public sector is expected

• Effective networks or partnerships between national and local; public and private

•Adopt flexible regulations (e.g. labor, import/exports)

Support development of financial security instruments at the national level (e.g. catastrophic insurance) and organization level (e.g. micro insurance, business disaster fund)

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Recommendations

Regional cooperation for supply chain resilience

• Continue to build partnerships with other multinational organizations inside and outside the APEC region

₋ Information sharing

₋ Promote regional resiliency assessment programs

₋ Application of local and international learnings

• Undertake dialogues, capacity building activities and cross collaboration in resource and technology sharing e.g. hazard mapping, IT infrastructure

Page 30: Building Business Continuity and Resilience to Natural ... · Philippine Disaster Profile More than half of the world’s intense natural disasters occurred in the Asia Pacific Region

Philippine Institute for Development Studies

Surian sa mga Pag-aaral Pangkaunlaran ng Pilipinas

Service through policy research

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