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Disaster Risk Manage and The Role of Corporate Sec India Perspective
Disaster Risk Manage and The Role of Corporate Sec India Perspective
Disaster Risk Manage and The Role of Corporate Sec India Perspective
AND
THE ROLE OF CORPORATE SECTOR
Government of India
Ministry of Home Affairs
National Disaster Management Division
Page
1. Introduction 1
7. Conclusion 29
Abbreviations
2. The Role of Corporate Sector “….. [Business has] responsibility to itself, to its
customers, workers, shareholders and the
In keeping with the paradigm shift in its
community…. every enterprise, no matter how
approach to disaster management brought large or small, must, if it is to enjoy confidence
about by the Government of India and the and respect seek actively to discharge its
recurring phenomenon of natural disasters responsibilities in all directions….. and not to
impacting all sectors of socio-economic life, one or two groups, such as shareholders and
workers, at the expense of community and
including the corporate sector, and inflicting
consumer. Business must be just and humane,
heavy economic losses, focused attention has as well as efficient and dynamic.”
been given to risk mitigation endeavors to
— Shri Lal Bahadur Shastri
systematically reduce the vulnerabilities. The
Prime Minister of India in 1965
new approach stems from the premise that
development in any sector, more so in the of Commerce and Industry (FICCI), the PHD
corporate world, cannot be sustainable and Chambers of Commerce and Industry and other
viable unless risk reduction and mitigation industry and area-specific manufacturers and
measures are built into the development traders associations have been in the forefront
processes and that investments in mitigation are of providing much-needed succor to the
much more cost-effective than expenditure on affected populace for ameliorating their
relief, rehabilitation and reconstruction. sufferings.
Recognizing the gargantuan proportions of the The Confederation of Indian Industry (CII), with
challenge posed by recurring incidence of a direct membership base of nearly five
natural catastrophes, association and thousand industrial and corporate houses and
involvement of corporate sector and their an indirect associate membership of around fifty
representative nodal organizations for initiating thousand companies from 283 national and
disaster risk management measures has been regional sectoral associations, was the first
considered as integral to success of disaster industry organization to constitute a Disaster
management initiatives. Management Committee in May 2001 as part of
its corporate set-up to advise and assist its
The corporates in every country have always
member industries in initiating disaster risk
played a major role in post-disaster relief,
reduction steps to insulate industrial
rehabilitation and reconstruction efforts in the
establishments, infrastructure and processes
affected regions. In India, the contribution of the
from the vagaries and damaging potential of
corporate sector has been notable especially in
natural and man-made (industrial/technological)
the aftermath of the devastating super-cyclone
disasters.
in Orissa in 1999 and the Bhuj earthquake
(Gujarat) in 2001. The industrial and corporate CII had undertaken extensive relief,
organizations like the Confederation of Indian rehabilitation and reconstruction work in the
Industry (CII), the Federation of Indian Chambers aftermath of Orissa super-cyclone and Bhuj
substances in production processes and The corporate sector possesses huge resources
procedures. The EMD has also been assisting the – human, material, technical and financial – and
industries in development and implementation has significant presence in every region in the
of on-site and off-site disaster management country. It also works and interacts with the
plans for ushering into an environment friendly community very closely and has an important
industrial scenario, especially in the light of stake in the well-being and prosperity of the
experience of the Bhopal Gas Tragedy. community as its own progress and viability is
largely dependent upon a resilient and safe
In addition, many area-specific industrial and community. The accountability of the corporate
commercial associations have also been sector in terms of its Corporate Social
contributing towards the well-being of the Responsibility (CSR) has also increased as the
community around them by adopting socio- value and reputation of a company is being
economic practices aimed at improving the increasingly adjudged by its social behavior and
living conditions and generally benefiting the by its contribution to the economic well-being
people at large. For example, the Ankleshwar and development of the communities in which
Environment Preservation Society in Ankleshwar, it operates.
Gujarat along with Ankleshwar Industrial
Association has set up joint effluent treatment However, in keeping with the change in focus to
plants for medium and small-scale industries in the pre-disaster aspects of prevention,
the industrial belt with predominantly chemical mitigation and preparedness to mount an all-
industries and has also taken up disposal and round assault on vulnerabilities and building of
treatment of solid and hazardous waste capacities at all levels, a lot of emphasis has been
generated by industries and the cities with their laid on integrating the disaster risk reduction
own expertise and finance. Industries at and risk management aspects into the
Ankleshwar have shown that through a pro- functioning and processes of industries. With a
active and collaborative approach, view to achieve this objective, active
environmental problems can be addressed in a collaboration with representative industrial
constructive manner. organizations like the CII, FICCI etc. is being
forged for assessing and meeting the needs of The business corporations, because of their high
corporates to have their assets and infrastructure visibility, are being adjudged not merely on the
analyzed from the point of view of retrofitting of basis of their bottom lines but also on their social
existing structures and ensuring safety of up- behavior. By integrating CSR into its business
coming industrial assets and establishments strategy as a core value, the corporates not only
against the vagaries of nature. make a significant contribution to a better
society but are also recognized for doing so. This
The strategic framework envisages involvement has obvious benefits for the company. In fact,
of corporate bodies in entire gamut of issues enormous rewards are there both for the
connected with integrating disaster business/industrial community as well as the
management concerns in the developmental society. The companies are motivated to achieve
efforts of the private sector – with a specific profitability, sustainable growth and human
emphasis on pre-disaster aspects. progress by placing corporate social
responsibility in the mainstream of their
Moreover, the corporate sector organizations
business practice.
have linkages with other similar organizations in
different countries and regularly exchange and
As part of their corporate social responsibility,
supplement each others’ information and
the companies are encouraged to conduct
resources in times of need. It is, therefore,
business responsibly by contributing to the
imperative for the success of initiatives in the
economic health and development of
area of disaster risk management that corporate
communities in which they operate; create
sector organizations and their networks are
healthy and safe working conditions to attract
associated with different facets of disaster
and retain a quality workforce; manage risk more
management.
efficiently and minimize the negative impact of
its activities on the environment and its
Corporate Social Responsibility and
resources; be accountable to all stakeholders
Disaster Management:
through dialogue and transparency regarding
Corporate Social Responsibility (CSR) permeates economic, social and environmental impacts of
every aspect of the functioning of corporate business activities; operate a good governance
sector. The corporates always look for ways and structure and uphold the highest standards and
means to enhance the brand value of their ethics while conducting business.
company and their products. It is in this context
that corporate social responsibility makes good The corporate sector is an integral part of the
business sense. It is a business strategy that society. As a member of the community, it is its
works. Nowadays, the value and reputation of a responsibility to contribute to sustainable
company are increasingly being seen as its most development and to integrate social and
valuable assets for retaining the loyalty and trust environmental concerns in its business
of the public to ensure a bright and sustainable operations as well as in its interaction with other
future. stakeholders.
It can play a leading role in supporting and situation. In addition to this, the corporate sector
building the knowledge, capacity and skills of can be a precious source of technical knowledge,
the community in comprehensive risk-based as for example in the case of identification and
disaster management activities ranging from research on technological solutions to prepare
prevention, mitigation and preparedness to for and respond to natural disasters.
response and recovery. It can offer human and
financial resources and can also be a precious On the whole, corporate sector has the potential
source of technical know-how, as for example in for strengthening and promoting its own safety
the case of identification and research on and protection against natural catastrophes as
technological solutions to prepare for and well as in assisting the community at large in
respond to natural disasters. reducing its vulnerability to disasters.
3.1 The Gujarat Cyclone, 1998: Twisted 325 foot Microwave Tower, Porbander Gujarat
It is estimated that nearly ten thousand industrial led to hundreds of evacuations involving
units went out of production at the hands of the thousands of people. The scenario becomes scary
earthquake and an overwhelming majority of the and horrendous if one takes into account the
remaining ones operated at only fifty percept of generational and genetic impact on the
their output capacity. The economic loss on community for years to come.
account of disruption of industrial and
commercial activity for over a month is pegged The Bhopal Gas Tragedy of 1984, involving a
at more than rupees two thousand crores. The sudden release of about 30 tonnes of methyl
earthquake eroded nearly two percent of the GDP isocynate (MIC) at the Union Carbide plant due
of the State of Gujarat – one of the most to poor safety management practices, poor early
industrially advanced States in the country. warning systems and lack of community
preparedness led to death of nearly three
3.4 Industrial and Chemical disasters: thousand people, caused severe health and
respiratory problems and birth of deformed and
In addition to the onslaught of natural disasters
still-born children.
casting a long shadow over the viability of the
economic sector, susceptibility to industrial and
chemical hazards also poses a major threat to the
healthy and safe functioning of corporate sector.
over one hundred twenty thousand people substances including development of on-site and
chronically ill. The safety systems designed to off-site emergency plans, notifying the
prevent such a disaster at the plant had been shut authorities and the community around about the
down to save money. The survivors, denied processes and materials used, their storage,
adequate compensation, suffer from debilitating handling and transportation and the possible
illnesses and the heavily polluted site of the plant hazards emanating there from and the requisite
has not been cleaned up and poisonous precautionary measures.
chemicals continue to seep into the ground water
further compounding the misery of the residents. However, even after the worst chemical tragedy,
forty two major industrial disasters have taken
place since then taking a toll of over two hundred
fifty persons in India and exposure to hazardous
materials and wastes to explosives in metal scrap
continues unabated. In spite of numerous
environmental and regulatory laws, the chemical
and hazardous industries continue to generate
and discharge tonnes of potentially dangerous
wastes every day, posing a grave danger to
people’s health, lives and environment.
[The abandoned plant – Source:Greenpeace] In spite of stupendous human and economic cost
of natural phenomena in myriad forms resulting
The victims and sufferers of the tragedy are
in breakdown of support infrastructure and
bearing the brunt of the after-effects of gas
services compounding loss and trauma of the
leakage.
affected, the factors aggravating these continue
to multiply introducing newer hazards and
accentuating the vulnerabilities of human and
industrial infrastructure.
borrowings to meet its immediate needs and to stability and prosperity in the affected regions. It
make the industrial units operational. is only through adoption and integration of
comprehensive disaster risk reduction and
The natural as well as man-made disasters cast a mitigation measures that the long shadow of the
tremendous social, human and developmental deleterious impact of natural and industrial/
cost with a major impact on the overall human chemical catastrophes can be contained.
development indices and industrial growth,
Master Trainers. (iii) Linking the trained process of development of on-site and off-site
personnel with the Disaster Management DM plans entails identification of the hazards to
Teams under the District Administration. which the industry, the neighboring areas and
the region is susceptible; estimation of
The process of development of training modules vulnerable zones using credible worst case
has already been initiated and the training of scenarios; enumeration of characteristics of
industrial personnel is commencing shortly to socio-economic conditions of human
develop capacities in different facets of disaster population viz. number, concentration, health
management vis-à-vis industries. Under the conditions, social infrastructure and support
programme initiative, some industries have systems in the vulnerable areas; listing of critical
already started conducting mock-drills jointly facilities in these areas; analysis of risks posed by
with the district administration. Such mock-drills each industry based on readily available
have been conducted in Kochi (Kerala), New information on the likelihood of severity of
Delhi, Ankleshwar and Vadodara (Gujarat) and consequences; prioritization of industries on the
many other places to test and enhance the basis of estimated risks; ranking of risks;
capabilities for an efficacious response during an compilation of information on community
emergency. safeguards, response capabilities and previous
accident records; assessing probability of
4.3 — occurrence of disasters; enumeration of
● Mock Drills: Conducting mock-drills at resources available within the premises, in the
regular intervals to enhance preparedness neighborhood and likely to be mobilized along
levels and linkages with the District with their sources to meet the eventualities likely
Administration and other Emergency to occur; conducting mock-drills to test the
Support Functions (ESF) departments/ viability of the DM plan etc.
agencies, especially targeted at chemical,
mining and pharmaceutical sectors. In Gujarat Province, the Gujarat State Petroleum
Corporation and the Gujarat State Petronet
4.4 — Limited have well-developed on-site and off-site
● Development of on-site and off-site DM plans. Similarly, the Ankleshwar Industrial
Disaster Management Plans as per the Association has been assisting its member
guidelines issued by the Ministry of industries in development of on-site plans and
Environment and Forests (MoE&F). conducting mock-drills.
Preparation of on-site and off-site DM plans by commissioned to capture the resources in terms
the industries helps the industry to establish of specialized equipments, machinery, man-
necessary linkages with the authorities and the power etc. in the India Disaster Resource
community. It is also a mutually beneficial Inventory (IDRN). The web-enabled inventory
arrangement as it enables the industry to IDRN already has more than eighty thousand
summon immediate help in case of an records of resources available with Government
emergency within its premises. The corporates machinery at the Central and Provincial (State)
view it as an logical extension of the principle of levels across 550 districts in the country.
Corporate Social Responsibility (CSR) as earning
the confidence and trust of the community goes In order to ensure corporate sector contribution
a long way in forging strong ties with the to a speedy and effective disaster response, a
community and enhances the viability of the module has been developed embedded in the
industry. IDRN for the contribution of corporate sector
towards national endeavors for mounting a
4.5 — timely response. CII would list the manufacturers
● Preparation of inventory of resources, of specialized equipments. The CII module,
machinery, equipments and man-power embedded in the national portal, would also
available with the private sector for facilitate networking with and between CII
mobilization in the event of an emergency members through independent access to enter
for being uploaded on the India Disaster resource details directly to the database. The
Resource Network (IDRN). system requires on-line registration of each CII
member to be endorsed by CII office on-line
Inventorization of resources is a pre-requisite for before data entry is undertaken. The process of
mounting a speedy and effective disaster entering the records has already been initiated
response. An on-line web-enable resource by the industries. A proto-type of the IDRN
inventory has been developed and ‘Home Page’ is reproduced below —-
4.6 —
● Sensitization programmes for building a
Agartala, Jallandhar, Amritsar and a few more are Industries Minister, Government of Orissa inaugurating the
programme on 3rd September, 2004 in Bhubaneswar (Orissa)
in the offing.
The sensitization programmes have primarily
concentrated on informing the industries about
the hazards and the risks keeping in mind the
vulnerability profile of the country; the requisite
structural and non-structural mitigation
measures necessary to protect industrial assets
and infrastructure against earthquakes, cyclones,
floods and others; the need to make the
manufacturing processes and procedures
inherently safe especially against chemical and
fire hazards; importance of developing on-site
Chief Secretary, Tamil Nadu inaugurating the programme on
17th July, 2004 in Chennai and off-site disaster management plans and
establishing linkages with the district
administration as also about the role of corporate
sector in overall disaster risk reduction and
mitigation initiatives.
spreads outside the premises of KRL and the ● Communication failure was noticed with
Police control Room is informed. The veracity of high time lag between passing of
the Report is reconfirmed and the District messages.
authorities are informed. The Collector activates
● Plan to be updated regularly with
the off-site DM plan and assumes charge as
changed telephone numbers.
District Emergency Coordinator (DEC) and sets up
Control Room. The movement of traffic is ● Delay in calling Fire Services leading to
restricted and concerned departments are delay in rescue and lifting of casualties
informed. Local control room is set at the site and from the site.
information is passed along with coordination of ● Telecommunication is a major problem
operations. The Police, District Fire Officer, during an emergency and alternate
Industries Department, District Medical Officer communication network needs to be
and other Government functionaries are also established at the local control room.
informed.
● Training of Police and other
departments on importance of Disaster
Around 1130 hrs. the leak is plugged and the
Management Plans.
emergency is declared over. The important
observations arising out of the mock-drill were ● Delay in response time.
as follows:-
Currently, there are two funding mechanisms in losses were around USD 16 million.
India for relief and rehabilitation efforts — the
Calamity Relief Fund (CRF) and the National It is well known that natural disasters pose a
Calamity Contingency Fund (NCCF). This threat to India’s development and a formal risk
mechanism is reviewed by the Finance management strategy incorporating risk transfer
Commission every five years and makes mechanisms is required. The States could be
recommendations regarding division of tax and advised to prepare such strategies with fiscal
non-tax revenues between the Central and the incentives and technical support. The
State Governments. The size of CRF is determined government could also make insurance
after taking into account the expenditure on relief mandatory at least for those taking out
and rehabilitation over the past ten years. The mortgages. At the same time, disaster funding
Central Government contributes 75% of the strategies need to be based on probabilistic
revenues while the States contribute the determinations of loss potentials and funding
remaining 25% of the corpus. gaps and where possible should use private risk
financing markets. Since loss potentials vary
However, where the calamity is of proportions across regions, this should determine the urgency
beyond the capacity of the concerned State of risk transfer mechanisms.
Government, they can seek assistance under the
NCCF — a fund created at the Central level. The system of insurance should be accessible to
all including the rural and the poor alike. It should
For the period 2001-2005, the Finance compensate for catastrophic income losses to
Commission has allocated roughly Rupees ten protect consumption and debt repayment
thousand crores for the CRF. capacity and the private sector should be able to
extend the same with little or no government
In view of the increasing basic disaster frequency subsidy. As long as the instrument is voluntary
and the rapidly mounting disaster-related and unsubsidized, it will only be purchased when
monetary losses, the insurance sector can provide it is a less expensive and more effective
the requisite risk transfer instruments. However, alternative to existing risk management
the private insurance market is struggling to meet strategies.
the challenge due to low penetration levels.
India’s general insurance market is at a nascent Accordingly, adequate insurance protection must
stage and is considerably underdeveloped in be made available especially in high-risk areas to
spite of the fact that it has a huge potential. Yet low and moderate-income house owners. It is
the catastrophe insurance purchasing is imperative that the cost of disasters is minimized
insufficient as major insurers do not have through strong mitigation measures and these
accurate up-to-date accumulation data. must include apart from governments, the
business sector and the insurance industry.
In the Bhuj earthquake, insurable losses were Deductibles, co-insurance and surcharges are all
more than USD 2 million whereas the actual ways of ensuring insurance protection. Moreover,
any insurance programme must strategically aim Apart from the above-mentioned Government of
to dissuade location of industries and buildings Gujarat model of obtaining group insurance for
in high-risk areas and the pricing mechanism the community, the Municipalities and
should be as per the level of risk and exposure. In Development Corporations can add a small levy
high-risk areas, a pooling together of multiple to the property tax to utilize the same for buying
catastrophe risks would also promote coverage. insurance against catastrophes. The Group
Housing Cooperative Societies in urban areas can
In the Province (State) of Gujarat, the Gujarat State be authorized to recover insurance premiums
Disaster Management Authority (GSDMA) has along with maintenance charges. In addition, all
launched a Housing Insurance Programme lending financial institutions, banks and housing
seeking to address monitoring and loan corporations must cause insurance to be
implementation of recovery programmes and obtained compulsorily against catastrophes. At
long-term disaster management planning. Under the same time, all house building societies and
it, more than two hundred thousand households, organizations like Urban Development
newly constructed after the earthquake, were Authorities, City Development Authorities etc.
insured for ten years against fourteen types of associated with construction and development
risks including natural hazards and human- projects must be mandated to insure against
induced accidents. Over twenty one hundred catastrophes.
thousand houses reconstructed were insured to
mitigate the effects of disasters through risk Taking a cue from the experience in community
sharing mechanisms. The Standard Fire and insurance in Gujarat, it would be in fitness of
Special Perils Policy (SFSP) was launched with a things to explore the possibility of group
one-time premium of rupees 360/- (three insurance for the corporate sector on the basis
hundred sixty rupees) to cover risks for a period of a cluster of industries in an industrial estate or
of ten years up to a value of rupees one hundred industrial zone. This will help generate awareness
thousand. It was made mandatory for all on the issue of securing the industrial assets and
reconstruction programs. adopting a common approach to disasters.
[Source: GSDMA]
— Extract from a Chapter on ‘Disaster Management – The Development Perspective’ in the Tenth
Five Year Plan Document by the Planning Commission of India [2002-2007]
approaches which meet the needs of the objective being to change the existing
industry and its stakeholders while at the same unsustainable patterns of production and
time protecting, sustaining and enhancing the consumption.
human and natural resources for the future. It
means that economic development must while The World Summit on Sustainable Development
satisfying the needs of the enterprise protect the (WSSD) defines sustainable development as
community by ensuring that the natural and “development that meets the needs of the present
human resources are not exploited to their without compromising the ability of future
detriment. generations to meet their own needs.”
There is an umbilical bond between sustainable The Johannesburg Plan of Implementation has
development and disaster risk management and made a fervent plea to the private sector to
improve efficiency, alter existing production
the business organizations are recognizing it so.
patterns and consciously move towards
Integration of risk management measures has to
sustainable use of natural resources for all-round
be an all-pervasive activity by the corporates
development. It also calls for sound
across the industrial spectrum and must not
management of chemicals throughout their life
remain a one-off activity. It would seek
cycle and of hazardous wastes for sustainable
minimization of expenditure on rehabilitation
development so as to ensure that use and
and reconstruction to obviate dissipation of
production of chemicals causes minimum
precious developmental resources and help
adverse effects on human health and
interweave a culture of safety and preparedness
environment through scientific risk
in every walk of national life and more so in the
management measures.
corporate sector so that the development efforts
are both socially safe and commercially viable The sine qua non for safe and sustainable
and sustainable. The need is to bring about a development is promotion of corporate social
change in perceptions, attitudes, pre-conceived responsibility and accountability, strengthening
notions and mindsets among the corporate of public-private-partnerships and continuous
sector about the way the things are approached attention to improvements in corporate sector
now. practices and processes. For the corporate sector,
it is imperative to usher into not only sustainable
The challenge posed by the issue of sustainable but also safer development for which
development has been engaging the mind and harmonization of socio-economic and
thought of the international community and the environment concerns is a must. A multi-hazard
need to achieve equitable and balanced socio- approach addressing the disaster management
economic development has been acutely felt. concerns in the corporate sector and the
Sustainable development envisions integration corporates in turn complementing the disaster
of economic and social development with management endeavors at all levels will ensure
environment protection as interdependent and a strong and concerted attack on our
mutually reinforcing pillars. The overarching vulnerabilities.