A startling new global survey has exposed a critical lack of preparedness among small and medium enterprises (SMEs) for climate and natural disasters, with Indian businesses standing out as particularly vulnerable. The study, conducted by the India-headquartered Coalition for Disaster Resilient Infrastructure (CDRI), found that a mere 35% of SMEs worldwide have formal disaster continuity plans in place.
Global Survey Reveals Widespread Vulnerability
The first-of-its-kind survey, which covered 50 countries and interviewed over 500 senior executives, paints a grim picture. It highlights that more than half of all SMEs struggle with limited access to affordable finance, real-time climate information, and adequate insurance products. This forces many to treat spending on resilience as optional, a dangerous gamble in an era of escalating climate shocks.
Globally, there are an estimated 358 million SMEs, and they are often the hardest hit when disasters strike. The report cites devastating examples: 8,500 Indian SMEs were impacted during the 2015 floods, affecting 160,000 workers and causing losses exceeding $349 million in just two weeks. Similarly, after Japan's 2011 earthquake, 656 SMEs went bankrupt within a year, and Malaysian floods in 2014 affected over 13,000 small businesses.
Why Indian SMEs Are on the Front Line
Indian SMEs face a confluence of risks that amplify their exposure. Birendra P. Singh, an associate professor at Panjab University, explains the geographical peril: "The Indian subcontinent is highly prone to natural calamities due to its unique geography and climatic conditions." Located at the collision zone of tectonic plates, it is vulnerable to earthquakes, while its long coastline and monsoon climate expose it to cyclones, floods, and storm surges.
Compounding the physical risk is a significant insurance gap. While common covers like fire and motor insurance exist, protection against business interruption, cyber risks, and climate-related losses remains limited. Gurdeep Singh Batra of Bajaj General Insurance notes that penetration is low due to factors like "limited understanding of risk coverage, cash-flow constraints, and reliance on informal risk management."
Structural Hurdles and the Path Forward
The survey classified enterprises by turnover, defining small enterprises as those with a turnover below $10 million and medium enterprises between $10 million and $50 million. It found that SMEs frequently operate in high-risk areas like coastal zones and unplanned settlements, and often function informally, lacking access to structured finance and early warning systems.
Amit Prothi, Director General of CDRI, warned of "cascading impacts" from disasters that extend far beyond direct damage, significantly delaying recovery. Narendra Bharindwal, President of the Insurance Brokers Association of India (IBAI), pointed to structural issues: "This situation is caused by low margins, price sensitivity, lack of risk awareness and unfit products for SMEs." He suggested that penetration increases when insurance is sold as a tool for business continuity and credit facilitation.
With India suffering annual disaster-related losses of $9–10 billion, the urgent need for SMEs to build resilience is clear. The report underscores that without concerted efforts to improve planning, financing, and insurance coverage, the backbone of the Indian economy remains dangerously exposed to the next major shock.
