Tag Archives: Kathmandu

Series of disasters in Nepal….

Published in Magazine Issue: Vol:09,No 13 January 22, 2016 (Magh 8,2072)

A hazard has numerous risks attached to it and can present itself in many forms such as natural calamity, technological crisis or man-made tragedy. Businesses could face technological disasters such as supply-chain interruption, building collapse, information technology failure, power disruptions etc. Likewise, massive earthquake, flood, landslide etc. could strike us in the form of natural disaster. Sometimes hazards could be accidental or human-induced such as fire, chemical spill, strike, blockade, riot, and as extreme as terrorism.

Nowadays, increasing number of disaster is rapidly becoming a global phenomenon. We do not need to look elsewhere as we revisit a series of recent disasters that took place in our own backyard. 

Escalating number of disasters

Mid April 2014, a deadly avalanche on Mt. Everest killed over a dozen Sherpa guides. After a long dispute between the Nepalese government and the Sherpas, few of the insurance, compensation and safety related demands were met by the government. Foresight of the government and the relevant agencies would have made the aftermath a lot smoother as far as adequate insurance compensations for the deceased trekkers’ families were concerned.

Around the same time, late April 2014, A landslide hit the tunnel of Upper Madi Hydropower Project (25 MW) in Sildjure VDC, Kaski district of Nepal.  Over a dozen workers including a Chinese national were trapped in the under-construction tunnel. Three workers were found dead while rest were saved after a long and treacherous rescue efforts.

A massive landslide in Sindhupalchowk district of Nepal took hundreds of lives in early August, 2014. The Sunkoshi River and the roads were blocked in the region for weeks. Thousands of people in the region were affected and struggled for livelihood. The Sunkoshi Small Hydropower Plant (2.5MW) remained submerged underwater for weeks when the river rose up to 30 meters in height forming a pool of water following the landslide and river-blockage. The landslide triggered chain of events including loss of lives, properties, infrastructures, supply-chain and businesses in many sectors. Ministry of Home Affairs (MoHA) estimates that, between June and September, 2014, there were 265 dead, 256 missing and 157 injured due to floods and landslides alone.  

Around mid-October 2014, cyclone Hudhud, hovering in Nepalese sky, claimed dozens of lives and left unforgettable scars in the domestic tourism circuit. Although storms and heavy rain caused by Hudhud was devastating in the Indian states of Orissa and Adhra Pradesh, the scale of damages predicted for Nepal was rather moderate at the time. On the contrary, by the time the cyclone reached the heights of Nepalese mountains, it triggered deadly snow blizzards and avalanches in the Himalayas.

There were hundreds of trekkers (national and foreign) on the mountains while means of communication were mostly disrupted when the storm hit the region. It is apparent that the weather related information were not spread out in accurate and timely manner to the end users.

The hydrological system in South Asia is strongly controlled by the Himalayas, which act as barriers for monsoon rains. The Hudhud’s effects could have been expected (if not predicted) by the State and preparedness/response procedure (if it already had one in place) could have been followed to mitigate the loss.

Nearly 82 years after the mega earthquake of BS 1990, Nepalese were heavily shaken by the recent M 7.6 earthquake on Saturday, 25th April, 2015 at 11:56 NST and a major aftershock of M 6.8 on Tuesday, 12th May, 2015 at 12:50 NST. Although the earthquake-epicenters were located in Gorkha and Dolakha districts respectively, the devastations left around 9,000 dead, 23,000 injured and thousands homeless all over the country.

As per the Post Disaster Needs Assessment (PDNA), the private sectors have sustained over three times in damages and losses i.e. NPR 540 billion compared to the damages and losses of NPR 166 billion incurred by the public sectors.

More recently, the economic blockade imposed by India is no less than a man-made disaster for the Nepalese people and businesses facing dire need of petroleum products and other emergency supplies. Besides day to day inconveniences faced by the people, thousands of private sector industries and businesses were shut down within a week due to inadequate supply of fuel and raw materials from India. 

The blockade has interfered with every possible socio-economic dynamics of the country including, transportations, schools, hospitals, offices, business, services, households, festivals, entertainment, etc. 

Business threats

The aforementioned events were devastating in many ways compelling us to ask important questions such as, “Are our politicians liable?”, “Did the government envision such dreadful consequences?”, “Were the businesses prepared?”, “What is their response or plan ‘B’?”

Although, under normal circumstances, the probability of similar cataclysmic events repeating in the near future could be predicted relatively low but as we see, the consequences are certainly going to be catastrophic for people, businesses, communities and the country as a whole.

Flood, landslide and earthquake are some of the high risk natural hazards the nation is facing for a long time. Moreover, the businesses today cannot disregard other potential threats posed by fire, explosion, utility failure, communication breakdown, computer crash, equipment malfunction, operator error, terrorism, criminal activities or a blockade. Are our private businesses ready to face such painful surprises? How prepared are we to sustain and recover our businesses out of these catastrophes?

Disasters might occur locally but their effects can be sensed throughout the country if not globally.

In March, 2011, after the Tohuku-Tsunami in northeastern Japan, 656 Small and Mid-sized Enterprises (SMEs) went bankrupt within a year. Surprisingly, only 12% of the businesses were located in the vicinity where the disaster actually took place. Rest of the businesses were scattered throughout the country and were bankrupted by indirect loss of supply-chain disruption caused by the tsunami.

We need not look further as these scenarios are largely shaping in front of us and as a matter of fact, quite frequently these past couple of years. An avalanche occurs in the remote slopes of Himalayas and we see thinning crowd of domestic and international tourists in our airports for months.

A landslide occurs in Sindhupalchok district while people and businesses in the capital go panic due to elevated hours of load shedding and reduced supplies. Likewise, onset of political strikes in the southern belt can close down thousands of business all over the country within a week.

The rising frequency, ferocity and the extent of damages caused by natural disasters are not only threatening the growth of businesses but also questioning the sustainability of the entire country’s economy as the disaster loss of the nation takes away a big chunk of GDP every year.

When businesses are disrupted, it costs money. Lost revenues plus extra expenses means reduced profits. Insurance does not cover all the losses and cannot get back valued customers.

Role of private sector

It is a prevalent norm around the globe that less probable threats such as natural & technological disasters or the issues pertaining to emergency preparedness for that matter get lower priority than most of other functionalities within a business organization. In a country like Nepal this seems even more evident due to the lack of adequate government policies, visionary business model and culture of disaster preparedness.

As an engine for economic growth, private sector provides employment, standard of living as well as socio-economic growth of a country. Private sector businesses should not ignore the fact that their productivity and services are closely correlated with the safety and well-being of employees, community and the country as a whole. On the contrary, more often than not private sectors long for profit at the cost of disaster preparedness, environmental impact, business resilience and safety of people.

Many times, we have experienced in the past that the Government of Nepal as well as private sectors are awake for a few months during the flooding season. Authorities, communities, business houses and others come forward with titbits which are labeled ’emergency response’ and ‘disaster relief’ efforts in bits and pieces. After another few months the issues settle in oblivion as no sustainable effort is made for the recovery of people, community and businesses in the region.

Although the efforts and contributions are highly commendable and encouraging, the targeted CSR (Corporate Social Responsibility) value seems to get diluted and become unsustainable over time from a comprehensive Disaster Risk Management (DRM) perspective.

Anticipating, mitigating and managing disaster risks should be a collective effort because when disasters strike, “Business as usual” is disrupted for all. Avoiding supply-chain disruptions and maintaining smooth operations are in private sectors’ interest while at the same time this could be motivated by the CSR principle of the company, eventually adding value to the business by creating loyal customers.

Private companies could engage with their local or national communities, and undertake a systematic policy of ‘Giving Back’ to customers through DRM programs which would create a feedback loop resulting in long term customer loyalty, improved brand image as well as employee satisfaction. 

Way forward 

In Nepalese context, policies look good on paper but commendable action is nowhere near to be seen. A consolidating national authority (such as National Disaster Management Authority; NDMA)  and coordinated policies and efforts (comprising communities, private sectors, NGOs etc.) are still missing to prevent and mitigate the potential of loss due to natural, technological or human induced disasters.

Current Government policies are largely focused on reactive approach mostly responding to disasters rather than proactive measures such as prevention and risk mitigation initiatives. Thus, systematically embedding and infusing DRM strategy into the national infrastructure development projects is critical if the country honestly envisions proactive as well as sustainable DRM in the country.

Witnessing series of disasters throughout the country, it is proven that economic and the humanitarian catastrophes are imminent following a disaster such as a massive earthquake, extended flooding, landslide or a blockade.

Over the years, many independent humanitarian and development organizations have been propagating their DRR (Disaster Risk Reduction) efforts through public-private partnerships, awareness presentations, preparedness seminars, emergency response training and capability building workshops with a mission to achieve more resilient communities and safer societies around the country.

In today’s world of supply-chain network, business sectors and livelihoods of people are intertwined so intricately that they have to support each other to survive and sustain. The government and the private sectors must work together to make the businesses & communities more resilient to future disasters. Hence the pressing need of public-private partnership for the risk prevention, emergency preparedness, and business continuity planning in the event of recurring disasters, natural or otherwise.

At this juncture, it is high time now that the private businesses of Nepal should rightfully intervene for their own good and come together to join hands with the government as well as non-government agencies to increase their own disaster resilience and business continuity.   

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Published in Magazine Issue: Vol:09,No 13 January 22, 2016 (Magh 8,2072)

Bangladesh, Rana Plaza Collapse….

Earlier Published in Magazine Issue: Vol. : 08 No.- 18 March. 20 – 2015 (chaitra 6, 2071)

Background

Last April 2014, the sandwich collapse of Rana Plaza garment factory complex in the outskirts of Dhaka, Bangladesh marked its one year anniversary with commemoration and protest for compensation and safer working condition for the workers. The deadliest industrial accident in the history of Bangladesh claimed nearly 1,138 lives and yet more than 2,000 were left seriously injured or disabled. International Labor Organization (ILO) estimated that some $40 million needed to compensate the families and disabled garment workers.

Similar industrial accidents had happened in Bangladesh in the past but probably were not loud enough to register a wakeup call for the government or the concerned authorities. Most importantly, the Rana Plaza disaster could have been predicted, prevented or well-responded had they adequate safety and disaster risk reduction measures in place.

Better late than never, the Rana Plaza garment factory debacle brought about massive movements for similar industries to sign up for the newly implemented  Bangladesh fire and building safety accord. Although some progress have been made since, there still remains several unresolved issues such as lack of full implementation of newly-legislated labor laws, absence of a comprehensive building safety inspection process, and inadequate arrangements to compensate the victims of industrial accidents. There are lots of fire and building safety issues which still need to be addressed to comply with the accord.

Immediately after the disaster some key garment buyers and international retailers withdrew from Bangladesh while others responded with an objective of improving the factory condition including building infrastructure, fire safety and working conditions of the workers. At the time, there were about 30 major foreign retail brands which were supplied by more than 5,000 garment factories in Bangladesh.

It was sad to see that, in the wake of the disaster, only half of the retail brands came forward to compensate the family and the injured workers as part of their so-called Corporate Social Responsibility (CSR) activity. The other half probably wanted cheap clothes at the expense of safe working condition and wellbeing of the workers in Bangladesh. This could be a classic example of 21st century slavery where labors in developing countries are enslaved by affluent business societies around the globe.

Corporate Social Responsibility (CSR)

Businesses need to understand that the social responsibility of private sector goes beyond the day-to-day operation of producing efficient products and services for customers. The CSR of a company is not concerned just with its clients, suppliers, employees and shareholders but also with communities and other downstream stakeholders who take an interest in the behavior of the company. Sometimes private businesses are so busy making money they forget to see the complete picture and misinterpret CSR as mere charity works in bits and pieces. Of course there are short term benefits associated to these philanthropic activities to both business houses as well as communities but the targeted social and business impact gets diluted as often budget is limited and not sustainable for the desired cause.

Businesses definitely need to rise above the charity and the compliance requirements set by the government or international bodies and work on building a solid & sustainable platform where private sectors, communities and stakeholders can come together for shared values and wellbeing of people & environment as a whole. CSR can bring fundamental value to the private companies only if they learn to incorporate it into their growth strategy and sustainable business model.

Business Threats

As per Bangladesh Garment Manufacturers and Exporters Association (BGMEA), foreign buyers cancelled orders worth USD 110 million from 37 factories in 2014. The number of new ready-made garment factories also declined from 113 in fiscal year 2012-2013 to 65 in fiscal year 2013-2014.

On one hand Bangladesh has this immense need to address its existing safety and disaster preparedness issues such as fire and building safety accord while on the other it has more immediate challenge to quickly restore confidence of the foreign retailers so that the garment business continues with minimal disruption.

Although identifying and fixing structural flaws of other similar business complexes, developing emergency preparedness & response plans and establishing proactive safety management system within private businesses will definitely take some time, Bangladesh cannot afford to lose its foreign retailers by not meeting the basic safety requirements just now. The country and the private sector need to move together and faster if they want to recover and restore the garment businesses as ethics, brand image and consumer awareness are rapidly becoming the competitive grounds for the growth of any organization.

Further delaying and not meeting the basic safety standards might signal the international market or retailer brands to diversify to other countries which can provide with private businesses which are safety compliant, better prepared to face such disasters, have capabilities to respond to such emergencies and are well equipped to quickly recover from the tragedy.

Disaster Risk Management (DRM) & Business Continuity Plan (BCP)

When a disaster like this (collapse of Rana Plaza) occurs, the entire business community including the supply chain might go frantic, not sure what to do next. Now, let’s imagine the extent of  multiplying impact when a disaster like this replicates many times over in the event of a massive disaster, say earthquake which indeed is looming over us as one of the greatest risks.

When the scale of disaster is enormous, even the government and outside agencies become helpless in supporting the private companies before it is too late. According to the Insurance Information Institute, USA, up to 40% of businesses affected by a natural or man-made disaster never reopen.

After a disaster, companies would get under great pressure while managing activities related to emergency response, disaster recovery and finally continuing the business as usual. Unless these companies are prepared with adequate contingency plans guided by Disaster Risk Management (DRM) principles, it is hard to visualize their continued operation in the post-disaster scenario.

During such crisis, the most urgent need of businesses would be to quickly respond to the emergency (saving lives & property) and secondly, to recover its operational activities (becoming functional & continuing business as usual) at the earliest. Hence, arises the need for a comprehensive Business Continuity Plan (BCP).

BCP of an organization presents a holistic management approach which ensures that critical business functions will remain operational and the disaster recovery will be handled in a timely manner with minimal interruption. An effective BCP aligns with the overall DRM and CSR strategies, if an organization is willing to envision its long-term security, creative business leap and opportunities for growth.

BC Planning is a capability building process for an effective execution of risk reduction, emergency response and disaster recovery plans of any organization.Long-term sustainability of businesses depends on various stakeholders including employees, their families, shareholders, communities, suppliers, customers, government, media and other support groups. During an emergency, it might be overwhelming to manage them all and make quick decisions, especially when a great deal of money is involved. Therefore, BCP, a proactively thought-out procedure, can help a business to swiftly manage its resources as well as supports from other stakeholders.

Having a closer look at the increasing number of natural, human-induced or technological disasters these days, the need for BCP is aptly justified for any small, medium or large scale organization. Developing a BCP will improve the likelihood that businesses/industries will not only survive and recover themselves, but will also help their neighbors, communities and the entire country to recover more quickly.

Strategically planned companies would first invest in BCP to build their disaster resilience which in turn would enable them to continue their CSR efforts in the event of a catastrophic disaster. At the same time, BC Planning itself could be a significant part of CSR building process for any organization that is truly responsible to its employees, communities and customers. If an organization’s vision is well aligned with its DRM objectives and CSR values, business continuity planning is bound to happen in that organization.

Lesson to Learn                     

The collapse of Rana Plaza building served a lesson to Bangladesh. It has woken up a great number of private sectors, government bodies, employees, stakeholders and other groups from in and outside the country.

Considering the parallel in demography, infrastructure, government policies, business culture and the level of preparedness for disaster, it really brings us closer to the Rana Plaza experience and provides a real-time lesson to learn from. In Nepalese context many small, medium and large businesses, with 70% public investment in them, hold up the backbone of the country’s economy.

Therefore, developing BCP could prove to be the right foot forward by the private businesses. In order to support strategic DRM needs and sustainable CSR values of a company, BCP implementation could be a milestone initiative by the private businesses in Nepal. This certainly is a wake-up call to the government, private sector businesses and their stakeholders in Nepal.

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Earlier Published in Magazine Issue: Vol. : 08 No.- 18 March. 20 – 2015 (chaitra 6, 2071)