Businesses and Disasters: Vulnerability, Impacts, and Recovery

Abstract

As units of analysis in disaster research, businesses have only recently begun to be studied. Far more research has been conducted on public sector organizations such as local emergency management agencies, public safety agencies, and other governmental organizations. Researchers studying the economic impacts of disasters have tended to focus on units of analysis that are larger than individual firms and enterprises, such as community and regional economies. Until fairly recently, very little was known regarding such topics as business vulnerability, loss-reduction measures adopted by businesses, disaster impacts on businesses, and business recovery. Systematic research was lacking despite the singular importance of businesses for society. Private businesses provide a vast array of goods and services that literally make life possible in our complex global economy. A recent governmental report on the U.S. critical infrastructure points out that “[t]he lion’s share of our critical infrastructures and key assets are owned and operated by the private sector” (White House, 2003, p. 32)1. Businesses are the foundation of local, regional, and national economies; when businesses are affected by disasters, that disruption produces not only direct business losses, but also indirect losses and economic ripple effects. Destruction of and damage to businesses, along with disaster-related closures, result in the loss of jobs, negatively affecting incomes and creating even greater challenges for households, neighborhoods, and communities as they attempt to recover from disasters. After disasters, business owners face a host of challenges, including how to finance business recovery, and often how to cope simultaneously with damage to both business and residential property. Disasters can produce both psychological distress and additional debt burdens for business owners. At the community level, business destruction and damage can result in lost tax revenues for communities and can undermine the viability of business and commercial districts.