# 2. Disaster Reduction Strategies

# **2.1. Pre‐Disaster Mitigation**

The first line of defense against disasters is to minimize the probability that a disaster will take place, followed closely by minimizing losses should it happen. Many natural disasters, such as earthquakes, tornadoes and hurricanes, cannot be stopped, while others, such as terrorist attacks or major technological failures, can be. Other hazards such as floods can in some cases be stymied by proactive human actions in advance, ranging from adequate sewage system capacity to land‐use planning.

Several studies have been undertaken to carefully evaluate the benefits of hazard mitigation. One of the best known (MMC 2005; Rose et al. 2007b) evaluated a random sample of 10 years of FEMA hazard mitigation grants and arrived at a 4:1 benefit‐cost ratio, including some social benefits such as environmental protection and historical preservation. The vast majority of the grants were for structural measures, such as reinforcing buildings, buying out buildings in floodplains, and constructing levees, but some related to mitigation “processes” such as warning systems, hazard vulnerability mapping, and zoning. More than 95% of the FEMA grants went to the public sector, but there is every indication that the private sector benefit‐cost ratio would be at least as large. The Mexico Case Study (ODI, 2014) found a similar 4:1 ratio for the private sector. Hochrainer‐Stigler et al. (2011) in a review of 21 studies in developing countries found results similar to those of the MMC. More broadly, Mechler and Bouwer (2015) make the case that, despite the increase in risk exposure, various DRM strategies have decreased vulnerabilities (potential losses should the event happen) throughout the world.

One thing to note now, and that we will expand on below, is the fact that most structural mitigation measures are relatively expensive. Additionally, they are competing with (and can thus “crowd out”) other business investments that are more evidently likely to promote the firm’s bottom line. New approaches are needed to minimize such stresses and conflicts in order to achieve at least the 4:1 ratio. These can include finding lower cost alternatives to structural mitigation measures that achieve the same goals and ways of overlapping DRM in general with other private and public sector objectives.

# **2.2. Post‐Disaster Resilience**

Losses from disasters are not confined to property damage. Moreover, property (the capital _stock_ ) is not just valuable in and of itself but rather in terms of the _flow_ of goods and services it generates, often measured in terms of gross domestic product (GDP). Disruption of this flow, or business interruption (BI), just begins at the point of the disaster and continues until the economy has recovered (Rose 2004a). In several recent disasters, such as the September 11 World Trade Center bombings and Hurricane Katrina, BI losses have exceeded property damage.

While many have defined resilience so broadly as to include all activities that reduced disaster losses, we will confine our use of the term to those activities that dampen BI losses by using remaining resources more efficiently and recovering more quickly (Rose, 2004b; Rose 2009a). Examples of the former, or _static resilience_ , include conserving scarce resources, use of larger stockpiles, finding substitutes for critical materials, relocating business activity, and rescheduling lost production. Examples of the latter 5