The ROI of Emergency Preparedness

Emergency planning in risk-prone areas yields a measurably high return on investment. Read this insight.

International aid agencies have long emphasized the need for emergency preparedness to improve the speed and efficacy of disaster response, especially in risk-prone areas. But the payback of such investments has rarely been quantified. 

To better understand the benefits of emergency preparedness, UNICEF and the World Food Programme (WFP) engaged BCG to analyze investments made in Chad, Madagascar, and Pakistan and to help create a sound strategy. 

To quantify the time and cost savings of specific preparedness interventions and to determine which ones delivered the greatest return on investment (ROI), several types of interventions were analyzed. The analysis examined 49 investments in prestocking emergency supplies, improving infrastructure, training to enhance staff capabilities, and negotiating long-term agreements with suppliers. 

All the UNICEF and WFP emergency preparedness investments examined in Chad, Madagascar, and Pakistan were found to save significant time and/or costs in the event of an emergency:

  • Of the investments analyzed, 64% saved both costs and time. 
  • Overall, $5.6 million was invested in the 49 preparedness activities examined. These interventions saved a total of $12 million toward future humanitarian response, creating a net savings of $6.4 million.
  • Nearly all—93%—of the investments examined accelerated humanitarian response. No investment examined delayed response time. Preparedness interventions were found to speed up response time by more than one week, on average.

Taken together, the results make a strong case for the early funding of emergency preparation. The findings are highlighted in the UNICEF/WFP Return on Investment for Emergency Preparedness Study.

The study reached a number of conclusions about the overall ROI of emergency preparedness:

  • Large infrastructure investments yield the highest absolute savings.
  • Training yields the highest ROI because of its relatively small initial investment. But to fully capture the value, the trained staff must be retained to share knowledge and ensure quality.
  • The more dependent a country is on external goods and services, the higher the return on any investment that ensures that those goods and services are available in an emergency.
  • In countries that have greater capacities for coping, the ROI for more basic emergency preparation fades, and higher value is delivered by improving organizational capacity and training.
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