Major Characteristics of Disaster Risk and the Difficulties in its Management: A Survey of Corporate Disaster Risk Management(in Japanese)

Kenji Tanaka

ESRI Discussion paper series from Economic and Social Research Institute (ESRI)

Abstract: This paper explores the difficulties of corporate disaster risk management by surveying the existing literature in the field. We point out the characteristics of disaster risk, including the low probability of any one disaster occurring, the huge magnitude of losses caused by disasters, and the uncertainty in them. These characteristics distort our risk perception, and make risk assessment and evaluation of the effect of risk management difficult. In addition, the externality of disasters—that the damage of one company can influence all others through relations of interdependence—is also one of the difficulties in disaster risk management. Considering that a company managing disaster risk has an effect on stakeholder profits (including those of shareholders, customer companies, and consumers), attention must be paid to asymmetric information that may cause an agency problem.

Pages: 30 pages
Date: 2008-11
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Persistent link: https://EconPapers.repec.org/RePEc:esj:esridp:199

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