Building Business Resiliency in Nepal

‘93 Die in Nepal Stadium Stampede’ screamed the headline of LA Times dated 12 March 1988. Thousands had gathered at the Dasarath Stadium to watch the finals of the Tribhuvan Challenge Shield, Nepal’s largest football tournament organized by the All Nepal Football Association (ANFA), between Janakpur Cigarette Factory and Mukti Joddha from Bangladesh. A sudden hailstorm, locked exits, and the resulting stampede, however, became a nightmare for the spectators.

The disaster made international headlines as one of the largest stadium disasters globally. The tragedy, unmatched in Nepal’s sports history, is still called a “Black Day” in the history of the country’s sports. Of the 15 gates, only one Southern gate was open when a blinding hailstorm lashed Kathmandu, creating chaos. As a result, people rushing to find cover and leave the stadium got trampled in stampede. If the gates had been designed to open outward rather than inward and were just collapsible, tragedy could have been averted.

Nepal Never Learns

Even after 37 years of the Dasarath Stadium incident, many businesses still have the doors of their offices, factories, and working spaces open inwards. Imagine private schools with modern infrastructure having their classroom doors open inwards. The door will only close if students attempt to leave the room together. This completely disregards the majority of Disaster Risk Reduction and Management (DRRM) literature that mandates that the door of a room should open outward if there are more than 50 people in the room.

Nepal is a country prone to frequent disasters, both natural and man-made. Earthquakes, floods, landslides, fires, and diseases have historically crippled Nepal’s economy, leaving businesses struggling to recover. However, despite repeated catastrophic events, businesses in Nepal fail to learn from past mistakes and continue to lack proper preparedness measures.

Furthermore, a lack of awareness, financial constraints, and limited resource access prevent these businesses from investing in resilience strategies. Many businesses operate without insurance, emergency funds, or contingency plans, leaving them vulnerable to disruptions. The absence of structured training and capacity-building programs on disaster preparedness further weakens business resilience. Thus, businesses continue to focus on short-term relief and reactive measures rather than proactive planning.

Narratives Must Change

In order to move forward better, the way disasters are perceived by the general public, and by businesses themselves, must change. The data and information shared in the corridors of the government, development and humanitarian agencies, and media, focuses more on the types of disasters and lives lost by disaster types. The human cost of natural disaster 2000-2019 reports:

• Globally, disasters comprise 44% floods, 38% storms, 8% earthquakes, etc.
• Disasters have affected 1.65 billion (41%) by floods, 1.43 billion (35%) by droughts, 727 million (18%) by storms, and 118 million (3%) by earthquakes, among others.
• Human loss by disaster type consists 58% (721,318) from earthquakes, 16% (199,718) from storms, 13% from extreme climate, and 9% from floods, etc.

However, the figures of global economic losses including 47% (USD 1.37 trillion) losses from storms, 22% (USD 651 billion) from floods, and 21% (USD 636 billion) from earthquakes, and their impact on business hardly get any mention. What is also not considered is that, without the private sector being resilient and active, no government and humanitarian agencies can respond quickly even if there is intent and resources.

The devastating Gorkha earthquake of 2015 reportedly impacted the GDP by 24.77% with a loss of USD 5.17 billion or NPR 648 billion, as stated in the Post Disaster Needs Assessment (PDNA) report by the National Planning Commission (NPC). While this became a popular piece of information, no media coverage or other reports focused on what the private sector and businesses must have gone through.  Were there any coverage or discussions on how women’s businesses must have suffered?

Many businesses were not even aware of the three NRB surveys conducted during COVID-19 covering 674 industries in 52 districts between June 2020 and April 2021. In a workshop organized for economic journalists in the summer of 2023, even they accepted that there is no ‘beat’ focusing on disaster for business. Thus, the narratives around disasters must change to include the impact that they make on businesses, big or small.

Preparedness is Needed, Not Just Response

The private sector is known to be generous in supporting the government’s post-disaster effort considering NPR 1.74 billion was deposited into the Prime Minister’s Natural Disaster Relief Fund after the earthquake. However, businesses themselves have not shown any effort to prepare and be disaster-resilient themselves. And this was seen again when Jajarkot was shaken badly in November 2023. There is also a common understanding that the big earthquake is still to come. Yet, businesses are still underprepared, probably hoping that Swayambhu, Pashupatinath, and the million spiritual power centers will bail them out. And this is despite the fact that there is evidence of many types of disasters affecting businesses countrywide. They range from fire, diseases, power outages, and landslides to climate change-induced newer challenges like the extended winter fog and extreme summer heat in the Terai, unseasonal heavy rain, and urban flooding affecting small businesses and hydropower plants alike. In Nepal, 98% of industrial establishments are MSMEs, that provide 57% employment and contribute 22% of the GDP. And worldwide, 65% of small businesses fail to continue within one year of a major disaster. Considering these statistics, the fact that businesses have only responded to these hazards and impending disasters needs to be changed. It is time to be prepared and increase preparedness.

The Role of BCM and BCP in Enhancing Business Resiliency

In order to counter the lack of preparedness, incorporating Business Continuity Management (BCM) and Business Continuity Plan (BCP) can significantly enhance the resilience of Nepali businesses. These frameworks provide structured approaches to identifying risks, developing response strategies, and ensuring business operations continue during and after a disaster.

Key Benefits of BCM and BCP:

• Risk Identification and Mitigation: Helps businesses identify vulnerabilities and ensure proactive actions to address them.
• Minimized Downtime: Ensures businesses can resume operations quickly, reducing financial losses.
• Enhanced Investor and Customer Confidence: Demonstrates preparedness, making businesses more attractive to investors and customers.
• Regulatory Compliance: Aligns businesses with international best practices, improving overall business governance.

Getting Prepared

Businesses in Nepal are not ready to cope with natural and human-induced disasters. The need for the private sector to collaborate with the government, development agencies, the public, and other private sector actors for improved DRRM is evident as only a few businesses have adopted BCM and made and implemented the BCP.

In a study by the National Business Initiative, Nepal (NBI) in March 2024, to understand the status of preparedness and adoption of BCP among Nepali businesses, 88.3% reported suffering at least one disaster in the past. Yet, 60.2% reported no insurance coverage or risk transfer mechanisms to mitigate the disruptions or financial impact. However, 92.2% were willing to adopt BCM/BCP once informed about its benefits.

Sensing a strong indication by the private sector to gain more knowledge and insights to implement BCM, thereby increasing investments in business disaster preparedness, the Private Sector Engagement (PSE) arm of USAID’s Tayar Nepal program conducted a series of interventions to equip businesses with BCM and implement BCP from 2022 and 2024.

More than 300 businesses, members of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI), Hotel Association of Nepal (HNA), Nepal Bankers’ Association (NBA), Federation of Woman Entrepreneurs Associations of Nepal (FWEAN), National Banking Institute (NBI), Chaudhary Foundation, Batas Group, Robotics Association of Nepal (RAN), and various startups and other companies benefited. Further, efforts were made to make the faculty and management students aware through engagement with Tribhuvan University (TU), Kathmandu University (KU), Pokhara University (PU), Private & Boarding Schools’ Organization Nepal (PABSON), and its colleges.

Besides the USAID program, there have been other interventions to support the private sector. The Asian Disaster Preparedness Center (ADPC) Bangkok with its implementing partner, the National Disaster Reduction Center, worked with FNCCI to conduct BCM Training of Trainers and awareness building in 2018. Similarly, the Asia-Pacific Alliance for Disaster Management, Japan (A-PAD) in Nepal held its inaugural International Symposium in June 2022 with a focus on the ‘Establishment of a Multi-Sectoral Platform for Disaster Risk Reduction and Management in Nepal’.

Each initiative has contributed to the growing appetite, albeit slowly, for Nepali businesses to seek knowledge to be disaster resilient. However, there is a difference between knowing and doing. There needs to be an urgency to act and invest in preparedness, especially considering that there is ample evidence worldwide that every USD 1 invested in disaster preparedness will provide USD 7 to USD 14 in return when disaster strikes businesses.

Making BCM/BCP Mandatory in Business Colleges and Loan Approvals

One way to ensure widespread adoption of BCM/BCP is by integrating it into business education and financial decision-making.

1. Incorporating BCM in Business Curricula: All business colleges in Nepal should include BCM as a mandatory subject, equipping future entrepreneurs and business leaders with the necessary skills to build resilient enterprises.
2. Bank Loan Requirements: Financial institutions should require a BCP as a prerequisite for business loans. This would ensure that businesses seeking funding have a clear strategy for disaster preparedness and risk management.

Good Practices

Multinational companies in Nepal have had their share of disasters and have responded better as BCM has been entrenched in its processes. Ncell has a separate department on Business Resilience with over 200 of its staff designated and trained as BCM champions. This is apart from their mandatory hardware requirements to ensure redundancy and kickstart operations and services from different locations in minimal time.

Standard Chartered Bank, in its earlier avatar, had to implement BCM in 2002 after the Gujarat (India) earthquake mandated preparedness across the region. It turned out to be a profitable investment as it has been said that they won the lucrative contract to operate inside the United Nations Development Programme (UNDP) premises displacing Nepal Bank, which did not have a BCM component then.

In recent years, the senior management of the Wai Wai factories at the Chaudhary Group in different parts of Nepal have also gone through the rigorous process of making and implementing BCP, thereby ensuring continuity, reduced downtime, and increased profitability. Similarly, Hotel Sarathi in Dhulikhel has been at the forefront of implementing BCP in its hotel, contributing to the proposed upscaling of its property as a four-star destination and IPO.

Further, NBI has organized activities and events to change the narrative of business resilience by recognizing the businesses that have been championing disaster preparedness and investing in spreading the word. It started the ‘Business Resilience Award’ in June 2024 with an intent to conduct it every two years. NBI believes that building business resilience is a priority that syncs well with its mission to uphold and promote responsible business.

Looking Ahead

The adage “prevention is better than cure” holds with business resilience in Nepal. The cost of recovery from disasters far outweighs the investment required for preparedness. Nepali businesses, big and small, must adopt a proactive approach by integrating disaster resilience measures into their operations.

The government, financial institutions, and business leaders must work together to promote a culture of preparedness. Promoting success stories; recognizing business leaders who invest in disaster preparedness; making BCM education mandatory; and tying business loans to BCP requirements are crucial steps toward creating a resilient business ecosystem.

Now is the time to act. Nepal cannot afford to repeat past mistakes. Investing in business resilience is not just a choice — it is an imperative for economic stability and growth.