GAR 2025: Hazard explorations
Disasters seldom come alone, which is another reason their costs are underestimated. The most damaging events are often multi-hazard: floods trigger landslides, cyclones drive flooding and droughts accelerate desertification.
Multi-hazard events
Multi-hazard events compound and even increase losses beyond the sum of their parts. Analysis of the last century of data recorded in the Emergence Events Database (EM-DAT) maintained by the Centre for Research on the Epidemiology of Disasters at the Université Catholique de Louvain in Belgium shows that while only around 19% of disasters are classified as multi-hazard, these events account for almost 59% of the total economic losses.
Multi-hazard events can also result in compounded costs, eroding coping capacity as affected households contend with multiple threats simultaneously. Understanding multi-hazard risk and building this analysis into cost-benefit analysis can improve the effectiveness of preparedness actions and infrastructure investments. Multi-hazard integrated investments in reducing disaster risk can have cascading benefits on SDG achievement globally from enhancing food security, to improving air quality, and reducing greenhouse gas emissions.
Between 2000 to 2023, five hazards triggered 90 per cent of disaster deaths: earthquakes (50%), extreme heat (18%), storms (14%), floods (8%), and droughts (2%). Reducing the risk to these disasters can act as a powerful lever to accelerate sustainable development.
Annual average losses
Overall, the annual average loss for critical infrastructure sectors due to these three hazards globally is USD 257.2 billion.
There are significant regional differences in losses however, with USD 2.3 billion of losses in Africa, USD 103.7 billion in the Americas, USD 126.9 billion in Asia, USD 56.7 billion in Europe and USD 5.9 billion in Oceania. Lower USD losses in Africa do not necessarily mean less of an impact on GDP or sustainable development.
Taking a multi-hazard approach is important for investment as it helps give a more comprehensive picture of how to better reduce the risk of recurrent disasters. For example, in 2023, North America had by far the greatest economic exposure to disasters overall, with USD 69.57 billion in direct losses. These nevertheless represent a relatively modest share (0.23%) of subregional GDP. Micronesia, on the other hand, incurred only a fraction of these net losses – USD 4.3 billion – but with a far greater relative impact (46.1%) on its subregional GDP.
GDP losses occur across a range of hazards, so investment strategies need to take this into account.
The impact of a disaster on a country’s economy also depends on its policies, investments and development levels. Disaster-related losses can fluctuate significantly from year to year, depending on conditions. In the case of North America, for instance, while the annual cost of disasters as a proportion of GDP was 0.23% in 2023, in 2005 the proportion was almost seven times higher at 1.74% as storms like Hurricane Katrina exposed vulnerable cities like New Orleans to significant losses that year. However, because many of these losses were covered by insurance, the risk was shared across the public and private sectors.
In contrast, in small island developing states such as Micronesia, where the cost of disasters as a share of national GDP was 0.03% in 2006 and a massive 46% in 2023, risk transfer mechanisms that can share losses across the public and private sector were much less prevalent. As a result, the national economy was much more acutely affected.
For more information see the GAR 2025 chapter 2, 4 and 5.
