Keywords: natural disasters, financial risk management, Wenchuan, earthquakes, China, investment evaluation, strategic investment, compliance, risk exposure, emergency management, disater management, crisis management, business continuity, systematic risks, unsystematic risks
Natural disaster and financial risk management
This paper explores and discusses the financial issues faced by firms in a natural disaster. It introduces the disaster risk environment and the factors that affect the operations of a firm. The implications of a natural disaster in terms of unsystematic and systematic risks, investment evaluation, strategic investment, and risk and compliance are addressed. It provides a framework to analyse the disaster risk exposure of a firm and how it might be used in risk management. The discussions in this paper are relevant to the Wenchuan earthquake in China in May 2008.