US companies are better prepared for catastrophes such as terrorism, pandemic outbreak or extreme weather events than companies in Europe and Asia Pacific.

29 September 2006

AMSTERDAM - US companies are better prepared for catastrophes such as terrorism, pandemic outbreak or extreme weather events than companies in Europe and Asia Pacific, reveals a new survey by the Economist Intelligence Unit.

A new survey of 225 risk managers worldwide by the Economist Intelligence Unit shows that 67 percent of respondents overall have increased the amount of time and resources they dedicate to catastrophe risk management in the past three years, but US respondents were more likely than those from either Asia-Pacific or Europe to have considered specific threats such as terrorism, extreme weather events and avian flu.

Sixty-four percent of US respondents had considered avian flu as part of their risk management processes, compared with 62 percent in Asia-Pacific and 43 percent in Europe.

For terrorism, the figures were 71 percent in the US, 62 percent in Asia-Pacific and 50 percent in Europe; and for extreme weather events, the results were 73 percent in the US, 49 percent in Asia-Pacific and 44 percent in Europe.

"Most of the executives we questioned recognise the need to prepare for catastrophe as part of their risk management processes, but North American companies appear to have the edge over those from both Asia-Pacific and Europe when it comes to considering specific threats," says Rob Mitchell, editor of the report Catastrophe Risk Management: Preparing for potential storms ahead.

Power outage was seen as the most significant threat that companies face. Next on the list came bird flu, which is cited by 43 percent of respondents as either significant or very significant, and then terrorism, which is seen as a significant or very significant threat by 35 percent.

Respondents from North America are most likely to see extreme weather events as a significant threat, no doubt reflecting growing concerns about the intensity of storms along the eastern and southern coast of the US, while respondents from Asia-Pacific are most likely to consider the threat from avian flu as significant.

Although 80 percent of respondents see preparing for catastrophe as important, only 32 percent say they devote significant time or resources to the activity. In addition, 49 percent of respondents feel that by devoting time and resources to preparing for catastrophe, they risk losing sight of more immediate priorities.

The majority, 81 percent, of companies believe that putting in place robust plans can be a competitive advantage. With business networks becoming increasingly complex, and companies relying on a growing number of partners, suppliers and outsourcing providers, participants in these networks can benefit by demonstrating to other members that they have considered catastrophe risk management and have processes in place to ensure resilience in the face of a major event.

Smaller companies are particularly vulnerable.

[Copyright Expatica News 2006]