Australian Corporates Warned on Natural Disasters Cost
Australian businesses have been warned that the cost to the country of natural disasters is could nearly quadruple by 2050 but could be dramatically reduced by national investment in preventive measures.
German reinsurance group Munich Re said that as Australia’s population density increases, so will severity and frequency of storms, floods, cyclones and bushfires. The group projects that the costs will steadily rise from A$6.3bn (US$5.8bn) a year currently to about A$23bn a year by 2050.
Munich Re, the world’s largest reinsurer, is part of the Australian Business Roundtable for Disaster Resilience and Safer Communities, a forum of business, companies and the Australian Red Cross established in 2012, which produced the study.
The group believes that investment in preventative measures could reduce the disaster response cost to the government by more than 50%. “Spending by the authorities on post-disaster recovery is 11 times higher than for measures to improve the safety of the Australian communities prior to disasters,” commented Ludger Arnoldussen, a Munich Re board member responsible for the Asia Pacific region.
“With a focus on prevention, damage could be partly avoided and expenditure reduced significantly.”
Australia’s government already spends an estimated A$560m annually on post-disaster relief and recovery but only an estimated A$50m on pre-disaster resilience, according to the study. Over the period 1967 to 2012, Australia suffered at least four natural disasters a year, with 2011 the worst year on record.