Strengthening resilience of Small and Medium-sized Enterprises

The Challenge

In recent years, extreme natural events have caused significant damage and economic losses in the Asia-Pacific region and had a particular negative impact on the private sector. The consequences for private businesses include destruction of property and equipment, damage to stock, loss of revenue from business interruptions and rising operational costs. The loss in market share due to clients changing to competitors, movement of skilled workers and impaired relationships with suppliers and retailers can affect long-term economic sustainability or even lead to closure of businesses.

Especially small and medium-sized enterprises (SMEs) are vulnerable to the impacts of natural hazards as they are often located in hazard prone areas and often show low investments in disaster resilience or business continuity management. In a number of countries in South East Asia, SMEs represent more than 95% of all businesses, which illustrates their key role for sustainable development. SMEs are often linked with international supply chains, which means that business interruptions of SMEs due to local disasters can have an impact on markets and enterprises in other regions. The risks for the private sector are hence not limited to single enterprises, sectors or industries, but can have serious impacts on entire economies.

Even before the floods in Thailand in 2011, disaster risks have increasingly been perceived as competitive factors by international investors in search of suppliers or production sites. Investments in disaster risk management reduce the damage and losses by SMEs, strengthen business competitiveness and secure work places in the long term.

Our Objectives

Our overall objective of the initiative was to increase the capacity and awareness on disaster and climate resilience of small and medium enterprises and to unlock private sector investments for enhanced resilience. In order to reach this objective, 5 intermediate objectives have been identified:

  1. Identifying the private sector investment needs and demand for disaster and climate resilience;
  2. Providing demand-driven technical assistance to SMEs along the process of prioritisation, cost-benefit analysis and the implementation of in-house risk reduction measures;
  3. Supporting governments in strengthening an enabling environment that promotes risk informed investments and increase access to risk financing and insurance products;
  4. Raising risk awareness among the private sector by facilitating knowledge sharing at the regional level;
  5. Up-scaling and formalizing business resilience and capacity development tools.

© GIZ / Dirk Ostermeier

Our Approach

The approach used in the initiative is based on a study that has been carried out by the project ‘Mobilising the Private Sector for Disaster Preventive Adaption to Climate Change’ implemented by GIZ. It was carried out in 2011 and commissioned by the Federal Ministry for Economic Cooperation and Development (BMZ). The study provided a first assessment and guidelines for selected partner countries towards an improved disaster preventive adaption to climate change for SMEs.

Within the framework of GIDRM I, the outcomes were reviewed and resulted in the use of a partnership approach for the initiative. GIDRM acted as a catalyst, bringing together various partners from the public and private sector to ensure ready-to-be used tools, access to partners and technical and financial support. Highlight of the partnership approach was the close cooperation with the iPrepareBusiness facility at the Asian Disaster Preparedness Center (ADPC) in cooperation with the Asian Development Bank (ADB) since December 2014.

In order to develop specific solutions and to analyse policies, legislations and operational factors in Indonesia, Philippines, Thailand and Vietnam surveys have been conducted in all four focus countries with more than 400 respondents per country. In addition, country context analyses have been carried out which were supported by national consultations. A thorough analysis of the data led to country specific roadmaps which include detailed recommendations and action points to increase disaster and climate resilience of SMEs in the respective country.

A specific example from Thailand shows the success of this partnership approach in strengthening disaster and climate resilience of SMEs. Under the Resilient Champion approach for Thailand, Isuzu Motors Co. (Thailand) Ltd. engaged the iPrepare Business Facility to provide direct technical support to nine selected SMEs which have been provided a series of in-house training to prepare for and respond to technical and natural hazards induced disasters including development of business continuity plans (BCP). After the success of the first partnership, Isuzu was engaged in another partnership with GIDRM I and the iPrepare Business Facility to support supply chain resilience by building capacities of their Tier-1 suppliers in Thailand on risk assessment and BCM with a disaster and climate risk lens. In order to promote upscaling of such initiatives, standardized training packages were developed that can be used to increase disaster and climate resilience of SMEs in the future.

A key regional knowledge sharing and networking event has been the establishment of the Asian Business Forum on Risk Reduction and Resilience Building, which took place in April 2016. The Asian Business Forum 2016 was jointly organized and financially supported by the Asian Disaster Preparedness Center (ADPC), Asian Development Bank (ADB), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Global Disaster Preparedness Center (GDPC) and The Asia Foundation brought together key actors and stakeholders concerned with engaging the private sector in more integrated efforts for Business Resilience. The forum objective was to create an effective platform for reflection and stocktaking on efforts focused on risk reduction for the private sector and to consider the specific challenges, lessons learned and good practices identified by relevant key stakeholders.

© GIZ / Dirk Ostermeier

Our Partners

GIDRM I partnered with a variety of different actors from both the private and public sector to engage the private sector and especially SMEs in disaster and climate resilience approaches. Amongst other GIDRM I was working with national government agencies for the promotion of SMEs, as well as with chambers of commerce, and respective national stakeholders in disaster risk management in the current focus countries of Indonesia, Philippines, Thailand and Vietnam. Furthermore, the SME resilience initiative was developed and implemented in close partnership with the iPrepare Business facility at ADPC and the Asian Development Bank (ADB) and Isuzu Motors Co. (Thailand) Ltd.

In the Philippines, we were a partner of the MSME Resiliency Core Group. The primary working group was made up of the Bureau of Small and Medium Enterprise Development Department of Trade and Industry (DTI-BSMED); Office of Civil Defense (OCD); Philippine Chamber of Commerce and Industry (PCCI); Philippine Disaster Resilience Foundation (PDRF); Philippine Exporters Confederation (PHILEXPORT); Asia-Pacific Alliance for Disaster Management Philippines (A-PAD); Employers Confederation of the Philippines (ECOP) and the Asian Disaster Preparedness Center (ADPC).

Cover photo: © GIZ / Ursula Meissner