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Every dollar spent on resilience saves five: Zurich

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Every dollar invested early to improve resilience to natural hazards helps, on average, to avoid five dollars in future losses, Zurich’s latest Risk Insights report says.

This statistic makes “a very clear case for investing up front rather than spending money only after an event to deal with incurred losses and finance repair,” the “Keeping an Eye on Natural Hazards” paper says.

Zurich says the number of disasters and their magnitude are growing at an unprecedented rate and there has not been significant success in halting the substantial increase in economic losses.

It says a “multiple-risk radar” is more important than ever, with the COVID-19 crisis another reminder to reflect on “how we can better recognise the early indicators in order to prevent, prepare for and respond to an event.”

The pandemic has “removed any doubt about the importance of understanding supply

chain vulnerabilities and interconnected risks,” the report says.

“The crisis served to reveal weak spots for many businesses and organisations, which can be

strengthened through proper planning in the event of a future pandemic.”

Zurich, which is currently preparing a report focusing on the 2018/19 bushfires in Tasmania, offers five key risk management recommendations:

  • Focus on prevention rather than recovery, reducing exposure while developing strong response and building continuity plans
  • Understand high-value supply chain vulnerabilities and interconnected risks
  • Emphasise employee preparedness at work and home so they remain safe and are in a position to help keep the business running from a remote location
  • Review insurance coverage, as proper multi-hazard coverage will speed recovery and allow businesses to be up and running faster, which means “retaining a customer base rather than re-attracting one”.
  • Conduct a post-event review if disaster strikes to better prepare the organisation.