SMEs are crucial to the global economy as they contribute more than 50% of Gross Domestic Product in most countries, and are also frequently a source of employment and livelihood for the world’s most vulnerable communities. However, compared to larger businesses, SMEs are not only less likely to be prepared to face disasters, they are also hit much harder by them, bearing the vast majority of overall business losses.
In order to support small and medium enterprises (SMEs) to be disaster-ready – a theme which constitutes one of the Four ARISE Priority Areas –, the United Nations Office for Disaster Risk Reduction (UNDRR) launched this week a new report titled “Focus on prevention: Increasing SME uptake of disaster risk reduction: recommendations for policymakers, financiers and the broader business community.” By pulling together evidence from case studies, stakeholder interviews, a workshop, and bespoke modelling, this publication appeals to relevant stakeholders to take actions that not only support SMEs, but also promote resilience in the community overall.
The first section of the report highlights some reasons why SMEs hesitate to invest in DRR. These include:
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A lack of access to finance;
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A lack of resilient business models;
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Contractual arrangements that are informal, incomplete or difficult for SMEs to enforce;
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A lack of prevention-focused business continuity planning outlining how a business will operate during an unplanned disruption in service.
The second section of the report focuses on Business Continuity Plans (BCPs) guidance and practices. This section analyzes the rationale behind BCPs and why they are a particularly useful tool to increase the resilience of SMEs.
The report then lays out opportunities for policymakers, financiers, and the broader business community to tackle these barriers, while enabling a more widespread adoption of DRR practices. These include:
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Strengthening the market for financing DRR by increasing public and concessional finance, removing regulatory barriers, and enhancing the capacity of local financial institutions to appraise DRR investments.
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Encouraging the adoption of resilient business models by providing supporting infrastructure such as telecommunications, enhancing SME capacity and awareness, and supporting SMEs to diversify geographically.
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Promoting more efficient contracting models by addressing power balances by setting low-cost dispute resolution and improving SME’s capacity to understand contracts and bargain collectively.
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Supporting business continuity plans as a relatively low-cost way of implementing risk prevention measures.
Preview and download the report here.