Social and Economic Resilience

Denis Waters Senior Economist

CIPMA Attorney-General’s Department

Business Continuity Institute 19 October 2011

Natural Hazards

Unnatural Disasters

It is people that make a disaster

Overview

• Why worry about resilience?

– A resilient society has benefits to business

– Resilient businesses have benefits to society

• How can resilience be analysed?

• How does it fit into the CIPMA analysis flow?

• Lessons for BCI and application in BCPs?

Focus on resilience

• What is resilience?

• Conceptual paradigm – Personal resilience

– Business resilience

– Community resilience

• Some metrics to facilitate economy

wide assessment of the human

costs of disasters

What is Resilience? • Vulnerability

– Tendency to be damaged

• Resilience

– Ability to resist or recover from damage

• Two sides of one coin

Why are we interested in resilience?

• We live in a world that contains hazards

– Preparedness before the event

– Recovery after the event

• Improved understanding of impact and

consequences ~ valuation of event

• Planning for the future

– Sustainability of communities and economy

CIPMA Analysis

Getting from a disaster to economy wide impact

Where metrics on resilience fit

CIPMA Critical Infrastructure Program for

Modelling and Analysis

Overview of CIPMA • A sophisticated “all hazard” national capability

– Insight into complex network behaviour

– Analyse relationships and interdependencies

• A tool to assist government and business decision makers

– Critical infrastructure , Counter terrorism , Emergency management

– Examine flow-on consequences

– Identify choke points, single points of failure and other vulnerabilities

• A business-government partnership

• High level of support and international recognition

• Simultaneous bomb blasts in CBDs

• Sydney electricity substation outages

• Tsunami hitting the North West Shelf

• Earthquake in the Latrobe Valley

• Support for security planning: APEC Leaders Week and World Youth Day

• Desktop exercises: Broadcast Sector / Emergency Services / Communications sector

• Varanus Island Incident economic impact assessment

• Port disruption from accident or man induced hazard in several states

• North-West Shelf gas outage

• Cyclone impact assessments: Gladstone and Darwin

• Dependency analysis: water / electricity / communications / banking and finance

• Energy disruption: gas and electricity SA / Vic ; CBD; WA; container ports

• Disruptions to internet infrastructure

• Australian Reinsurance Pool Corporation (ARPC) projects

• Climate change hazards and vulnerability analysis for Garnaut and infrastructure owners

• CBD engineering surveys – Melbourne, Sydney, Brisbane and Adelaide

PROJECT EXAMPLES

Risk Analysis

Workflow

x

1. Event

Hazard

Models

Earthquake,

Wind,

Flood,

Blast, Plume,

Man-made etc

Event Propagation

over space and time

3. Vulnerability

Asset/Node

Fragility curves

- Damage states

- Failure modes

Disruption-Recovery Profiles

4. System and Network Models

Electricity

Gas

Liquid fuels

Communications

Banking/Finance

Water

Transport

Spatial &

Temporal

People

Buildings

Business/Industry

5. Impact Footprint

Direct & Indirect Impacts

Business

Residential

Disruption induced

financial costs &

revenue impacts

Economy Wide Impact Winners and Losers

Real GRP,

Consumption,

Employment,

Investment

Casualties

Social Impacts

Injuries

Fatalities

Community & Business profiles

• Age

• Income

• Employment etc

Scenario – Likelihood - Consequence

GIS

0

0.0005

0.001

0.0015

0.002

0.0025

0.003

0.0035

10 100 1000 10000 100000

Return Period considered (years)

Ris

k -

An

nu

al

Da

ma

ge

Pe

rce

nta

ge

Mean+1SD cummulative riskMean cummulative riskMean-1SD cummulative risk

2. Exposure

A Conceptual Paradigm ~ Social

• Personal resilience

• I have …

• I am …

• I can …

• Extend to Community Resilience

– Town/City, Region, LGA, State, Nation

Resources

Skills

Educated

Young and Fit

Self evacuate

Stay and Protect

A Conceptual Paradigm ~ Economic

• Firm resilience

• It has …

• It is …

• It can …

• Extend to Community Resilience

– Town/City, Region, LGA, State, Nation

Inventory

Financial capacity

Above flood level

In soundly built premises

Restart rapidly

Operate without electricity for x

days

What Metrics are Needed? • Social resilience • Age

• Income

• Children and Parent number

• Car ownership

• Housing tenure

• Health status

• Nouse and Education

• Language skills

• Volunteering social capital

• Newness to an area

• Insurance

• Business resilience • Size and Turnover

• Financial status

• Commodity

– Essential or discretionary

• Firm age

• Owner experience

• Staff

• Staff locations

• Business continuity plans

• Supply chain interlinkages

• Insurance

2009 Victorian Bushfire

Fire areas

Social resilience indicators

Cyclone Tracy Rerun

Building damage in 2008

Social Indicators visualised spatially

Guides to Resilience

Cyclone Central Queensland

Economic Resilience

Hypothetical Go to Whoa event

Novel wind vulnerability

Novel GIS visualisation

Local and Remote impacts

Economic effects depend on damage to industry and recovery processes

Gladstone Cyclone Task

• Category 3 cyclone impacting on Gladstone

• Examined direct and indirect effects of

damage to electricity system,

telecommunications, industry and the

population

….Gladstone Economic Effects

• Depends on whether the smelter could be

shut down before the cyclone hit

– If not shut down, pot lines freeze and could

result in permanent closure or delay restart

– GDP loss with permanent closure would be

around $10 billion over 7 years

– If restored, GDP loss would be a fifth of the

larger disaster

Impact on Fitzroy region

-5.00

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

2007 2008 2009 2010 2011 2012 2013 2014

% d

ev

iati

on

fro

m r

efe

ren

ce

ca

se

Scenario 1a Scenario 1b Scenario 2

Hard landing and Leave

Hard landing and

Restore

Soft landing

-0.12

-0.10

-0.08

-0.06

-0.04

-0.02

0.00

2007 2008 2009 2010 2011 2012 2013 2014

% d

evia

tio

n f

rom

ref

eren

ce c

ase

Scenario 1a Scenario 1b Scenario 2

Impact on Australia

Hard landing and Leave

Hard landing and

Restore

Soft landing

Tsunami

Hypothetical event

Policy concerns ~ Boxing Day Tsunami

Engineering vulnerability

Flow on Economic Impact

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

$ M

illi

on

Nickel

Gold

Manganese

Copper

SaltLN

GIron O

re

15% Reduction in Exports

$2,585 Million Total

Regional Impacts

Gross Regional

Production

Pilbara -12%

Perth -0.09%

Rest of Western

Australia -0.14%

Rest of Australia -0.04%

Computable General

Equilibrium Methods

Resilience of the whole economy

Decision making information

Preparation Response and Recovery

What other elements are important in

identifying resilience?

• Enabling us to answer questions

– How resilient is our society?

– How resilient is our economy?

• Metrics depend on the hazard

– Resilience against what?

– Resilience for what?

What other metrics are important?

• Recovery processes interact with resilience

• Evidence based policies depend on data

– How can we make Australians more resilient, more sustainable in the face of current and future hazards?

• Data for Preparedness, Response and Recovery

Metrics for the CGE modelling

• Personal resilience

– Household tastes

– Consumption patterns

– Capacity to avoid premature death

• Business resilience

– Stock and flow ~ capital and income changes

– Voluntary reductions of input demand

– Trade diversions and supply chain changes

Social and economic resilience

metrics are important in determining

the personal, community and national

cost of disasters

They contribute vitally to the evidence

base for preparedness and resilience

planning

CIPMA analyses have increased

social and economic resilience

through holistic framework which

brings together

Hazard, Exposure, Vulnerability and

Impact and Consequence research

for decision making and resilience

planning before an event

Critical infrastructure is more resilient

- companies are better prepared

Therefore communities are more

resilient

Therefore the cost of disasters is less

than it otherwise would be

CIPMA & Disasters resilience?

BCI and Resilience?

Integral element in BC plans

Resilience ~ an outcome of plans

Understanding resilience

improves BCPs

Thank You

Questions?