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Tuesday, October 18

Economic impacts of seismic risk: lessons for Wellington

The recent earthquakes in Canterbury have provided a number of lessons that can be drawn upon to help organisations in Wellington better prepare for seismic events, Reserve Bank Governor Alan Bollard said this morning.


In his opening address entitled Economic impacts of seismic risk: lessons for Wellington, presented to a Rotary Forum held in Wellington, Dr Bollard said Canterbury’s experience had shown that events like major earthquakes have many unpredictabilities and uncertainties.


“Institutions should focus on preparedness, competency, leadership, delegation and resilience rather than detailed plans for specific situations that may not repeat themselves,’ he said.


The Reserve Bank had also noted that earthquakes should not be thought of as a “short sharp event, but rather as a rolling set of shocks with a long period of continuing after-shocks. These can cause ongoing damage to land as well as buildings, continued disruption, delay assessment, and slow reconstruction,” he said.


The Bank prepared itself for such events by assigning key people from each department to support the Bank and its critical business functions should a disruptive event occur. Other preparations included establishing an Auckland office to carry on the Bank’s core functions, should the Wellington office ever become inaccessible.


Dr Bollard also noted that disaster preparedness is necessary and desirable, but not costless. Determining the appropriate balance of such concerns in advance will always be a challenging task, he said.


Following human life and safety concerns, the Bank’s immediate focus after the Canterbury earthquakes had been ensuring essential economic activity would continue.


Dr Bollard said this had been followed by a focus on the soundness of the financial system and the financial health of key economic organisations. Throughout this period the Bank had remained focused on the aim of price stability, and had set policy appropriately to ensure this was achieved over the medium-term.