The strategic markets of Philippines, China, Japan and Bangladesh are home to over half of the 100 cities most exposed to natural hazards, highlighting the potential risks to foreign business, supply chains and economic output in Asia from extreme weather events and seismic disasters, according to new research from global risk analytics company, Verisk Maplecroft.
The 5th annual Natural Hazards Risk Atlas (NHRA) assesses the natural hazard exposure of over 1,300 cities, selected for their importance as significant economic and population centres in the coming decade. Of the 100 cities with the greatest exposure to natural hazards, 21 are located in the Philippines, 16 in China, 11 in Japan and 8 in Bangladesh. The analysis considers the combined risk posed by tropical storms and cyclones, floods, earthquakes, tsunamis, severe storms, extra-tropical cyclones, wildfires, storm surges, volcanoes and landslides.
The Philippines’ extreme exposure to a myriad of natural hazards is reflected by the inclusion of 8 of the country’s cities among the ten most at risk globally, including Tuguegarao (2nd), Lucena (3rd), Manila (4th), San Fernando (5th) and Cabantuan (6th). Port Vila, Vanuatu (1st) and Taipei City, Taiwan (8th) are the only cities not located in the Philippines to feature in the top 10.
Manufacturing and logistics hubs among cities most at risk
According to Verisk Maplecroft, natural hazards constitute one of the most severe disrupters of business and supply chain continuity, and also threaten economic output and growth in some of the world’s key cities, especially for those located in the emerging markets.
“As typhoon Haiyan in the Philippines and the tsunami in Japan showed us, natural hazard events can have far-reaching and long-lasting impacts on supply chains, business and economies,” states Dr Richard Hewston, Principal Environmental Analyst at Verisk Maplecroft. “Understanding how, where and why those risks manifest is an imperative in managing potential shocks.”
According to the NHRA, several key manufacturing and logistics hubs are highly exposed to natural hazards. One of the world’s busiest ports Tokyo is ranked 22nd, while the commercial centres of Manila (4th), Taipei City (8th) and Dhaka (35th) and the important Chinese manufacturing locations of Wenzhou (49th), Foshan (63rd) and Dongguan (80th) all feature among the 100 most exposed cities.
Despite gains, the fastest growing economies still lack resilience to natural hazards
The highest risk cities in Japan and the Philippines are highly exposed to a variety of hazards, including earthquakes, typhoons, severe storms and landslides. Tuguegarao (2nd), Lucena (3rd) and Manila (4th) in the Philippines, along with Kawasaki (15th), Osaka (16th) and Nara (17th) in Japan are highly prone to earthquakes and typhoons – two of the deadliest and costliest hazard types.
Natural hazard risk is compounded in the Philippines by poor institutional and societal capacity to manage, respond and recover from natural hazards events. In addition to assessing exposure, the Natural Hazards Risk Atlas also evaluates a country’s ability to manage and mitigate the impacts of natural hazard events, through the Socio-economic Resilience Index. While Japan, which ranks 178th out 198 countries for resilience, is classified as ‘low risk,’ the Philippines (80th), is considered ‘high risk’, in part due to entrenched corruption and high levels of poverty.
“With foreign investment continuing to flow into countries highly exposed to natural hazards, those which are unable to demonstrate robust resilience may lose an element of their competitiveness,” adds Hewston. “Company decision-making over sourcing locations or market entry is increasingly influenced by issues such as strength of infrastructure and institutional robustness.”