STRENGTHENING DISASTER AND CLIMATE RESILIENCE OF SMALL & MEDIUM ENTERPRISES IN ASIA. Thailand SME RESILIENCE SURVEY RESULTS

Transcription

1 STRENGTHENING DISASTER AND CLIMATE RESILIENCE OF SMALL & MEDIUM ENTERPRISES IN ASIA Thailand SME RESILIENCE SURVEY RESULTS

2 The iprepare Business facility for engaging the private sector in Disaster Risk Management is a joint initiative by the Asian Disaster Preparedness Center (ADPC), the Asian Development Bank (ADB) through the Integrated Disaster Risk Management (IDRM) Fund and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH within the framework of the Global Initiative on Disaster Risk Management (GIDRM). It focuses on building disaster-resilient businesses in the region through partnerships to strengthen the resilience of the private sector, particularly SMEs; providing technical assistance in strengthening resilience on a demand-driven basis; supporting governments in strengthening the enabling environment that promotes risk sensitive and informed investments by private sector; and facilitating knowledge sharing at the regional and national levels. The Asian Disaster Preparedness Center (ADPC) is an independent regional nonprofit organization that works to build the resilience of people, communities and institutions to disasters and climate change impacts in Asia-Pacific. Over the past 30-years, ADPC has expanded its scope and diversified its operations for a programmatic approach that offers long-term and sustainable solutions to addressing the underlying causes of disasters and climate change risks. The Asian Development Bank (ADB) is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific. ADB assists its members, and partners, by providing loans, technical assistance, grants, guarantees, and equity investments to promote social and economic development. With support from the Government of Canada, ADB established the Integrated Disaster Risk Management (IDRM) Fund in 2013, to assist the development of proactive IDRM solutions on a regional basis within ADB s developing member countries in Southeast Asia, including Cambodia, Indonesia, Laos, Myanmar, Philippines, Thailand and Viet Nam. The Fund provides a strong mechanism for supporting ex ante investment in IDRM and complements the existing financing modalities of ADB for supporting ex post relief and recovery activities. In order to respond more effectively to the global challenges posed by disaster risks, the German Government, led by the Federal Ministry for Economic Cooperation and Development (BMZ), has founded the Global Initiative on Disaster Risk Management (GIDRM). The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ GmbH) has been commissioned to manage the GIDRM. The aim of the Global Initiative is to bring together German and regional experts from the public and private sectors, civil society and the academic and research community, to facilitate mutual learning across national boundaries as well as to develop and pilot innovative disaster risk management solutions. The Global Initiative focuses on three priority areas including Disaster Response Preparedness and Civil Protection; Critical Infrastructure and Risk-sensitive Economic Cycles; and Early Warning Systems. Publication details On behalf of the iprepare Business facility, Published by the Asian Disaster Preparedness Center (ADPC) SM Tower, 24th Floor 979/69 Paholyothin Road, Samsen Nai Phayathai, Bangkok 10400, Thailand Tel: Fax: adpc@adpc.net

3 i Acknowledgements The iprepare Business facility would like to express our immense appreciation to everyone who contributed in the formulation of the survey questionnaire and in conducting the survey. We are very grateful to the 425 enterprises from all over Thailand who participated in the survey. We are would like to express our appreciation to the Office of Small and Medium Enterprises Promotion (OSMEP), Department of Disaster Prevention and Mitigation (DDPM), Small and Medium Enterprise Development Bank of Thailand (SME bank), Thai SME Council, and Department of Revenue. Also, we would like to sincerely thank Mr. Chanyut Chamratporn of Isuzu Motors (Thailand) and Mr. Somnuek Chuapraditpun of Toyota Co-operation Club (TCC) for helping us reach our survey respondents. We would also like to acknowledge the support and advice provided by Stephan Huppertz and Hanna Maier of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ); Arghya Sinha Roy and Mary Jane David of Asian Development Bank (ADB); and Aslam Perwaiz of Asian Disaster Preparedness Center (ADPC).

4 ii SURVEY REPORT THAILAND Executive Summary Disaster occurrences cause losses and disruptions in business operations among small and medium enterprises. The iprepare Business facility intends to address this through the Strengthening the Disaster Resilience of Small and Medium Enterprises in Asia Project. One of the activities under the project is the conducting of a survey among SMEs to understand the state of their disaster resilience, including capacity gaps and needs. Specifically, the survey covered questions risk exposure, experiences from previous disasters, Business Continuity Plan adoption, incentives and training needs. A total of 425 enterprises responded to the survey which was done through , Survey Monkey, mail and events. Although the survey intended to indicate the status of disaster resilience and information disaster risk reduction among SMEs, inputs of large enterprises were collected to better understand capacity gaps between SMEs and large business. The survey results show no differences on the perception of potential hazards among the sizes of enterprises. However, the perception towards occurrences of hazards may be slightly different between country regions. In addition, disaster experiences that disrupted business operation may impact concerns about hazard risks. For example, severe flooding occurred during the year of 2011 in Thailand, and flood was the top hazard that the surveyed respondents were currently concerned about. The survey also illustrated that few enterprises had BCP adoption especially in SMEs. BCP awareness and BCP knowledge including resource persons were still needed. Competitive advantage of BCP should be promoted to motivate enterprises developing a written BCP. Furthermore, the cost of BCP preparation and lack of support from the government may limit an enterprise in developing their business continuity. Financial incentives such as tax deduction and grants, consultancy services, and regulations were the top measures that may be able to encourage SMEs to prepare BCP respectively. Other non-financial incentives such as awards and certification schemes may be enable SMEs motivation in BCP development. The survey results also indicated some enterprises had preparatory measures to minimize the potential financial loss caused by such disruptions even though they did not have a written BCP. Although large enterprises had attended more BCP- and DRR-related trainings than medium and small enterprises, this training experience was limited. Similarly, small enterprises had less risk finance and other mechanisms to cope with finance problems than medium and large enterprises. Large and medium enterprises were more likely to have an insurance mechanism to deal with business disruption than smaller enterprises. In addition, most of the small businesses and half of medium enterprises in the survey reported that none of disaster preparedness plans existed in their company. The government may need to collaborate with an expert agency to provide disaster management trainings and promote DRR environment among private enterprises especially SMEs. Department of Industrial Promotion, Department of Disaster Prevention and Mitigation, and Office of Small and Medium Enterprises Promotion were the top organizations that surveyed enterprises indicated should have a role on the roadmap of SME disaster resilience.

5 iii Table of Contents 01 Project Background 1 02 SME Survey and Methodology 2 Purpose of the Survey 2 Survey Questions 2 Survey Respondents 3 03 Findings 9 Risk Exposure and Previous Disaster Experience 9 BCP Adoption 17 Incentives and Training Needs 34 Additional DRR Concerns Conclusion 46 Risk exposure and previous disaster experience 46 BCP adoption 47 Incentives and Training Needs 48 Additional DRR Concerns 49

6 iv SURVEY REPORT THAILAND List of Figures and Tables Figure 1 Distribution of respondents according to how they were reached (n = 425) 3 Figure 2 Distribution of respondents according to definition of SMEs in Thailand 4 Figure 3 Distribution of respondents according to number of employees (n = 425) 5 Figure 4 Distribution of respondents according to asset value (n = 425) 5 Figure 5 Geographic distribution of respondents according to region. (n = 416) 5 Figure 6 Distribution of respondents according to asset value (n = 425) 6 Figure 7 Distribution of respondents according year of establishment (n = 377) 7 Figure 8 Distribution of respondents according to gender (n = 425) 7 Figure 9 Distribution of respondents according year of establishment (n = 377) 8 Figure 10 Hazards that can potentially affect business operations 10 Figure 11 Top 6 Potential hazards that can affect business by country regions 11 Figure 12 Distribution of respondents according to disaster experience (n = 425) 12 Figure 13 Distribution of industries that had experiences in business disruption 13 Figure 14 Year in which last major disruption to business operations occurred 14 Figure 15 Period business operations stopped in 2011 sorted by the size of enterprises 15 Figure 16 The cost of damage in 2011 sorted by the size of enterprises 15 Figure 17 Impacts of hazard disruption on business (n = 264) 16 Figure 18 Distribution of respondents according to written BCP (n = 425) 17 Figure 19 Enterprises with no written BCP (n = 326) 17 Figure 20 Status of BCP adoption separated by size of enterprises 18 Figure 21 Reasons for not preparing a written BCP by small enterprises (n = 168) 19 Figure 22 Reasons for not preparing a written BCP by large enterprises. (n = 41) 20 Figure 23 Reasons that would motivate small enterprises to develop a BCP (n = 168) 21 Figure 24 Reasons that would motivate medium enterprises to develop a BCP (n = 117) 22 Figure 25 Reasons that would motivate large enterprises to develop a BCP (n =41) 23 Figure 26 Distribution of year in which the respondents last updated BCP (N =46) 24 Figure 27 Distribution of year in which the respondents last tested BCP (n = 46) 25 Figure 28 Do the respondents have an organization chart showing the position of the BCP manager in the company? (n = 46) 25

7 v Figure 29 Are respondents BCP connected to the community or local disaster preparedness plan? (n = 46) 26 Figure 30 Hazards being addressed by BCP (n = 46) 27 Figure 31 Reasons that motivate those who have BCP to develop the plan (n = 46) 28 Figure 32 Application of BCP in actual business disruption and how useful it was (n = 46) 29 Figure 33 Presence of government support in BCP preparation (n = 46) 29 Figure 34 Method used in preparing BCP (n = 46) 30 Figure 35 Frequency of BCP updated 30 Figure 36 Good practices in BCP implementation or in disaster preparedness (n = 46) 31 Figure 37 Types of BCP implementation style that respondents preferred (n = 46) 34 Figure 38 National government making it compulsory for SMEs to prepare a BCP (n = 425) 34 Figure 39 Perception of small business on incentives that the government should provide to encourage SMEs to be disaster resilience (n = 198) 35 Figure 40 Perception of medium business on incentives that the government should provide to encourage SMEs to be disaster resilient (n = 149) 35 Figure 41 Perception of large business on incentives that the government should provide to encourage SMEs to be disaster resilient (n = 78) 36 Figure 42 Attendance to BCP-related training (n = 386) 37 Figure 43 Attendance to BCP-related training sorted by size of enterprises 37 Figure 44 Attendance to a DRM-related training (n = 391) 38 Figure 45 Attendance to a DRM-related training categorized by size of enterprises 38 Figure 46 Public organization that should have a role on the roadmap of SME disaster resilience (n = 425) 39 Figure 47 Participation in local risk reduction and management council (n = 388) 39 Figure 48 Mutual aid agreement with another organization to help each other during and after emergencies ( n = 425) 40 Figure 49 Risk Finance Mechanism (n = 425) 41 Figure 50 Distribution of written disaster preparedness plan (n = 425) 43 Figure 51 Coping mechanism that you use in dealing with business disruptions and emergencies (n = 425) 44 Figure 52 Coping mechanism that you use in dealing with business disruptions and emergencies categorized by the size of enterprises 45

8 vi SURVEY REPORT THAILAND Table 1 Definition of SMEs in Thailand 4 Table 2 Distribution of respondents obtained certified standards 8 Table 3 Distribution of hazards caused major disruption in the year of Table 4 Distribution of hazards caused major disruption during Table 5 The year in which enterprises first prepared their written BCP 24 Table 6 The cost in preparing BCP 31 Table 7 Number of days used in preparing BCP 31 Table 8 Information of those who have a written BCP with their suppliers 32 Table 9 A detail of respondents who had mutual aid agreement 40 Table 10 Number of existing risk finance mechanism according to the size of enterprises 41 Table 11 Number of existing risk finance mechanism compared between the respondents who had a written BCP and vice versa 42 Table 12 Number of existing disaster preparedness plans according to the size of enterprises 43 Table 13 Number of existing written disaster preparedness plan compared between the respondents who had a written BCP and vice versa 44

9 Project Background 01 The Strengthening the Disaster Resilience of Small and Medium Enterprises in Asia project is being implemented by the iprepare Business facility. It is supported by the Asian Development Bank s Integrated Disaster Risk Management Fund, financed by the Government of Canada, and the German Ministry for Economic Development and Cooperation (BMZ) through the Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ) within the framework of the Global Initiative on Disaster Risk Management (GIDRM). The Project covers the countries of Indonesia, Philippines, Thailand, and Vietnam. It aims to build disaster-resilient enterprises by: 1) identifying actions to strengthen resilience of SMEs; 2) providing technical assistance in strengthening resilience to selected SMEs on a demanddriven basis; 3) supporting governments in strengthening the enabling environment that promotes risk sensitive and informed investments by SMEs; and 4) facilitating knowledge sharing at the regional level. In Thailand, ADPC works with partners from the government and private sector in project implementation. The main government partners are the Office of Small and Medium Enterprise Promotion (OSMEP) and Department of Disaster Prevention and Mitigation (DDPM). Other public organizations involved are the SME Bank and the Department of Revenue. Private sector partners are Thai SME Council, Isuzu Motor (Thailand) Co., Ltd., and Toyota Co-operation Club. These partners support ADPC to collect data of SME resilience survey.

10 SME Survey and Methodology 02 Purpose of the Survey One of the project components is the conducting of survey on SME resilience. The survey aims to gather information that will contribute to a deeper understanding of the current state of disaster resilience amongst SMEs. It also aims to assess the status of the adoption of Business Continuity Plan (BCP) among SMEs and to identify capacity gaps and training needs. Aside from gathering information, the survey is also meant as an advocacy tool to encourage reflection and self-assessment amongst the survey respondents about the various risks they face, their preparedness plans, and their current and intended future level of disaster resilience. The survey findings will serve as inputs in the formulation of a national roadmap for strengthening SME resilience and identification of good practices that will be showcased in the Business Forum on Risk Reduction and Resilience Building in April Survey Questions The survey questions were grouped into seven parts. Part 1 Part 2 Part 3 Part 4 Part 5 Part 6 Part 7 Basic information about the survey respondent Risk exposure and previous disaster experience BCP adoption Incentives and training needs Additional DRR information Contact information BCP implementation (only for those with BCP)

11 SME Survey and Methodology 3 The first set of questions sought basic information about the business operations of the respondents, such as type of the business, gender of owner, year of establishment, location, number of employees and value of assets. These questions make it possible to classify the respondents according to sector and enterprise size (i.e., micro, small, medium, or large). Then, there were questions about perceptions of risk exposure and actual disaster experiences. The intent was to identify which among the many potential natural and human-made hazards are of concern to SMEs, including those which have actually affected them in the past including the extent of damages and how it impacted their businesses. The next category of questions sought to assess the status of BCP adoption and implementation by identifying by respondents. The questions also solicited inputs from respondents on what government can do to promote BCP amongst SMEs. The last group of questions dealt with existing risk reduction measures, previous relevant training and current training needs. These provide additional information on the level of resilience of respondents and their capacity to the mitigate impacts of future disasters. Survey Respondents A total of 425 enterprises responded to the survey. The respondents were reached through four ways supported by project partners (see, Figure 1). Over 41% of respondents were self-administered through a variety of events such as trainings and seminars organized by OSMEP, SME Bank, and ADPC. Toyota Cooperation Club and Isuzu Motor (Thailand) also helped ADPC collect data from their suppliers via (29.9%). About 20% of the responses were collected from hard copies with the help of the Department of Revenue. Only 8.5% of respondents did online survey through Survey Monkey, which Thai SME Council also supported by asking their members to complete the online survey. Figure 1 Distribution of respondents according to how they were reached (n = 425) 41.4% 29.9% Event 8.5% Mail/hard copies 20.2% Survey monkey Definition of SMEs in Thailand is based on number of employees and value of total fixed assets (excluding land). Table 1 presents SMEs definition categorized by industrial types.

12 4 SURVEY REPORT THAILAND Table 1 Definition of SMEs in Thailand Type Number of employees Fixed assets (ThB million)* Small Medium Small Medium Manufacturing < < < ThB mil < 200 Services < < < ThB mil < 200 Wholesale < < < ThB mil < 100 Retail < < < ThB mil < 600 *31 THB = 1 USD/ source: Bank of Thailand (2011). Key challenges for SMEs financial access in Thailand. Retrieved from: adfiap.org/wp-content/uploads/2011/06/economy-presentation-thailand.pdf According to 425 enterprises, Most of respondents were SMEs which 47% and 35% of total respondents were small and medium enterprises respectively (see, Figure 2). Eighteen percent of the respondents were large enterprises which most of them were suppliers of either Isuzu Motor (Thailand) or Toyota. Although the survey only focuses on SME disaster resilience, getting information from large enterprises perception is necessary. The study may be able to identify capacity gap of BCP adoption and difference perceptions on risk exposure, incentive, and training needs between large enterprises and SMEs. Figure 2 Distribution of respondents according to definition of SMEs in Thailand 18% 82% 35% 47% Large SME Medium Small For the indication of enterprise size, Figure 3 and Figure 4 show the numbers of employees and the amount of fixed assets excluding land in Thai Baht accordingly. In terms of number of employees, 41.4% of surveyed enterprises had 1 to 25 employees. And, in term of the asset value, 34.1% of the respondents indicated that the value of their enterprises fixed assets were less than or equal to THB 10 million. These figures also indicated the results that most respondents were small enterprises.

13 SME Survey and Methodology 5 Figure 3 Distribution of respondents according to number of employees (n = 425) % % % 200 or more 18.4% Do not answer 0.7% 0 10% 20% 30% 40% 50% Figure 4 Distribution of respondents according to asset value (n = 425) Assets (property excluded) ThB Do not answer 3.1% more than 200,000, % 100,000, ,000, % 50,000, ,000, % 10,000,001-50,000, % Less or equal to 10,000, % 0 10% 20% 30% 40% 50% Although most of respondents came from Bangkok (the capital province), the study made efforts to represent information across the country. Besides Bangkok metropolitan area, the respondents were from Central, East, West, Northeast, South, and North regions respectively. The study had respondents from every region of the country. However, there was only one survey from the North region represented (0.24% of respondents). Figure 5 Geographic distribution of respondents according to region. (n = 416) Bangkok (Capital) 33.89% South 0.96% Central 18.51% Region West 17.31% East 18.27% Northwest 10.2% North 0.24% 0 10% 20% 30% 40% 50%

14 6 SURVEY REPORT THAILAND Figure 6 represents the number of the respondents according to industrial sectors. Most of SME respondents came from the sectors of manufacturing, wholesale and retail trade, automotive, food service activities, agriculture, forestry, and fishery respectively. For large enterprises, 66 out of 78 respondents came from automotive sector. For year of establishment, most of the enterprises started their business operation during (35.5%) and (26.3%) respectively. Nearly 84% of surveyed enterprises were established after the 1990s. Figure 6 Distribution of respondents according to asset value (n = 425) Automotive 80% 66% Manufacturing 7% 91% Wholesale & retail trade 1% 72% Food service activities 23% Agriculture, forestry & fishery 22% Other 18% Industry Transportation & storage 17% Construction 17% Accommodation service activities 10% No answer 1% 6% Information & communication 5% Financial & insurance activities 1% 3% Mining & quarrying 1% Real estate activities 2% 0 20% 40% 60% 80% 100% Large enterprise SMEs

15 SME Survey and Methodology 7 In terms year of establishment, most of the enterprises started their business operation during (35.5%) and (26.3%) respectively. Nearly 84% of surveyed enterprises were established after the 1990s. Figure 7 Distribution of respondents according year of establishment (n = 377) % % % Year % % % % 0 10% 20% 30% 40% 50% In terms of gender, the majority of the head of the enterprises surveyed were male (75.3%, see figure 8). In addition, Figure 9 represents the head of business between large enterprises and SMEs categorized by gender. According to the respondents, only 4 out of 78 (5.1%) large enterprises indicated that the head of business was female. Since large enterprises in the study came from automotive sector, we may imply that there are a relatively low number of women represented as the head of organizations in the automotive industry. Furthermore, for the SMEs, 88 out of 347 (25.3% of SMEs) reported that their enterprises had a female person as the business head. The study showed that the majority of heads of business in Thailand are male suggesting an imbalance in terms of gender in this regard. Figure 8 Distribution of respondents according to gender (n = 425) 21.6% 3.1% 75.3% Male Female Do not answer

16 8 SURVEY REPORT THAILAND Figure 9 Distribution of respondents according year of establishment (n = 377) Male Female Did not answer 3% Large enterprise SMEs In terms of standards for which enterprises are currently certified, Table 2 shows the different results between SMEs and large enterprises. About 60% of SMEs respondents indicated that they did not have any certified standards. Approximately 26% of SMEs had ISO 9001 (Quality Management). For large enterprises, most of them reported that their enterprises were certified on ISO (environmental management, 86%) and ISO 9001 (60%) respectively. About 1% of large enterprises reported that they have no certified standards. However, both SMEs and large enterprises rarely indicated that they were certified by ISO (Business Continuity Management). Notably, no SME respondents answered that they were certified under ISO with 3% of larger enterprises reporting that they currently held this certification. Table 2 Distribution of respondents obtained certified standards SMEs (N=347) Large enterprises (n=78) ISO % 60% ISO % 86% ISO % 3% None 60% 1%

17 Findings 03 Risk Exposure and Previous Disaster Experience On the hazards that can potentially affect their business, the top responses are flood (60%), fire (31.5%), regional or global economic crisis (30.8%), power blackout (28.7%), transportation system breakdown (19.5%), and civil unrest (12.9%) respectively (see, Figure 10). It should be noted that not only natural but also man-made hazards were concerned by the respondents. Although Thailand rarely had experiences in devastating natural disasters, flood was on the top of hazards that the respondents were concerned about due to the flood situation in the year of There were 4.5% of respondents who reported that no hazards had the potential to disrupt their business operation. And, it is interesting that all of these 4.5% respondents indicated they never had experience in business disruption caused by any hazards.

18 10 SURVEY REPORT THAILAND Figure 10 Hazards that can potentially affect business operations Flood 60% Fire 31.5% Regional or global economic crisis 30.8% Power blackout 28.7% Transportation system breakdown 19.5% Civil unrest 12.9% Armed conflict 11.8% Accidents 10.6% Theft 8.9% Foreign currency fluctuations 8.5% Lightning 7.3% Earthquake 6.6% Drought 6.6% Water shortage or contamination 6.4% Data loss Volcanic eruption 6.4% Terrorism 5.6% None 4.5% Pandemic/Epidemic 3.1% Typhoon 1.9% Wildfire 1.9% Cyber attacks 1.6% Tsunami 1.6% Insect infestation 1.6% Tornado 0.7% Others 0.7% Landslide 0.5% 0 20% 40% 60% 80% 100%

19 Findings 11 Figure 11 Top 6 Potential hazards that can affect business by country regions Central Region (n=77) Flood 36.9% Fire 24.1% Power blackout 19.1% Regional or global economic crisis 18.4% Transportation system breakdown 7.1% Civil unrest 7.1% 0 10% 20% 30% 40% 50% East Region (n=76) Flood 63.2% Fire 19.1% Power blackout 19.1% Regional or global economic crisis 11.3% Accident 8.5% Armed conflict 5% 0 20% 40% 60% 80% 100% Northwest Region (n=45) Flood 18.4% Regional or global economic crisis 13.5% Drought 9.2% Power blackout 7.8% Theft 7.1% Fire 6.4% 0 10% 20% 30% 40% 50%

20 12 SURVEY REPORT THAILAND West Region (n=72) Flood 57.9% Regional or global economic crisis 20.6% Transportation system breakdown 15.6% Power blackout 12.8% Civil unrest 7.1% Fire 6.4% 0 20% 40% 60% 80% 100% Bangkok (n=141) Flood 65.2% Fire 37.6% Power blackout 26.2% Transportation system breakdown 25.5% Regional or global economic crisis 24.1% Civil unrest 19.9% 0 20% 40% 60% 80% 100% In terms of disaster experience, about 34% of respondents indicated that they had experienced a major disruption to their business operations. Typically, the affected respondents stopped their business operation due to the last disruption for 47.4 days, and the cause of damage on average was 26.2 million Baht. Figure 12 Distribution of respondents according to disaster experience (n = 425) 4% 33.9% 62.1% No experience from major disruption Have experience from major disruption Do not answer

21 Findings 13 Overall, the respondents who indicated experience in a major disruption came from a variety of industries such as automotive, manufacturing, wholesale and retail trade, food service activities, agriculture, forestry, and fishery, and transportation. Figure 13 shows there is no significant difference on experiences in business disruption between industries. On average, one-third enterprises of each industry had experience in disruption caused by hazards. Figure 13 Distribution of industries that had experiences in business disruption 126 Automotive Manufacturing Wholesale & retail trade Food service activities 8 22 Agriculture, forestry & fishery 9 18 Other 8 17 Transportation & storage 6 17 Construction 3 12 Accommodation service activities 3 5 Information & communication 2 4 Financial & insurance activities 1 1 Mining & quarrying 0 2 Real estate activities Total respondents Respondents that experienced business disruption Most affected respondents (94 enterprises) confronted the major disruption in Figure 13 shows the year in which last major disruption to business operations occurred. The study found that the rate of affected respondents in the year of 2011 was highly different from other years. Moreover, in 2011, the period of disruption affected business was about 45.3 days, and the cost of damage due to the disruption

22 14 SURVEY REPORT THAILAND was 29.9 million Baht. Based on other records 1, Thailand encountered the worst flood crisis in 2011 due to heavy rainfalls caused by monsoon and a series of Typhoon triggering at the end of July Flooding started through the Northern, Northeastern, and Central regions accordingly, and remained in some areas until mid-january In addition, 65 out of 77 provinces in Thailand were declared flood disasters. Seven major industrial estates had their operations stopped by a body of water as high as 3 meters during the flood. Similarly, the study also found that 95.7% of affected respondents in 2011 experienced the major disruption from flood (see Table 4). Figure 14 Year in which last major disruption to business operations occurred Table 3 Distribution of hazards caused major disruption in the year of (n=94) Respondents % Flood Regional or global economic crisis Fire Civil unrest Blackout Armed conflict Transportation system breakdown Other Terrorism Water shortage and contamination Foreign currency fluctuation Landslide Earthquake Lightning Drought Pandemic/epidemic No answer Rerngnirunsathit, Phatsita Thailand Country Profile CR.pdf

23 Findings 15 Figure 15 Period business operations stopped in 2011 sorted by the size of enterprises Small Medium Large Flood 2011 Other 2011 According to disruption period, when compared flood to other hazards, the study found that flood caused small and large enterprises to stop their operation longer than other hazards did in 2011 (see Figure 14). In the same year, the cost of damage by flood was rather high (see Figure 15). Normally, large enterprises encountered the cost of damage more than small enterprises, but it should be noted that small enterprises tended to stop their business operation longer than large enterprises. Figure 16 The cost of damage in 2011 sorted by the size of enterprises Small 3,291,924 3,333,077 Medium 39,866,667 31,500,000 Large 70,666, ,000,000 60,000,000 90,000, ,000, ,000,000 Thai Baht 140,595,180 Flood 2011 Other 2011

24 16 SURVEY REPORT THAILAND Table 4 Distribution of hazards caused major disruption during (n=33) Respondents % Flood Regional or global economic crisis Civil unrest Power blackout Armed conflict Others Fire Foreign currency fluctuation Earthquake Water shortage and contamination Cyber attacks Landslide After 2011, the top answer of hazards affecting business operation was still flood. In addition, the top hazards caused the major disruption (see Table 4 and Table 5) was very similar to the top hazards that survey respondents were concerned (see Table 3). However, it should be remarked that although there were some concerns about earthquake, the respondents experiences regarding earthquake were rare. For the impacts on business, affected respondents reported how past disasters disturbed business. Five major impacts on their business were: 1) employees unable to go to work (37.1%); (2) inability to deliver products (26.1%); (3) damages to facilities and equipment (22%); (4) suppliers were not able to deliver materials/ service; and (5) damages to raw materials (17.4%). Figure 17 Impacts of hazard disruption on business (n = 264) Employees unable to go to work 37.1% Inability to deliver products to market 26.1% Damages to facilities & equipment 22% Damages to raw materials 20.1% Suppliers were not able to deliver 17.4% Damages to finished products 17% Delay in collection of payments 16.3% Loss of clients 14% Cancellation of orders/contracts 7.2% Others 1.5% 0 10% 20% 30% 40% 50%

25 Findings 17 BCP Adoption On BCP adoption, 76.7% of respondents have no written BCP, 8.9% are currently in process of business continuity planning, and about 10.8% already have a BCP (see Figure 17). Figure 18 shows more than half of respondents who did not have written BCP were from small enterprises. In 2012, the survey report done by Asian Disaster Reduction Center (ADRC) indicated that no Thai SMEs have BCPs 2. However, in the study, we found that 3% of small and 11.4% of medium enterprises had their written BCP respectively. Typically, Figure 19 also represents status of BCP adoption among enterprises. It is not surprising that large enterprises had written BCP more than others (29.5% of large enterprise). Furthermore, small enterprises (84.8%) were the business size with the lowest rate of BCP adoption. However, it is noticeable that the rate of respondents who did not have written BCP, especially in small (84.8%) and medium (78.5%) enterprises was rather high. Figure 18 Distribution of respondents according to written BCP (n = 425) 8.9% 10.8% 3.5% No 76.7% Yes In process Do not answer Figure 19 Enterprises with no written BCP (n = 326) 12.6% 51.5% 35.9% Small Medium Large 2 ADRC (Asian Disaster Reduction Center) BCP Status of the SMEs in the Asia-Pacific Region publications/bcp/survey_2012.pdf.

26 18 SURVEY REPORT THAILAND Figure 20 Status of BCP adoption separated by size of enterprises 84.8 No Yes In process 29.5 Small Medium Large Enterprises without written BCP Figure 20 shows the reasons why small enterprises had not prepared written BCPs. Three major reasons were (1) the enterprise has not heard of BCP (40.5%); (2) lack of company BCP knowledge and expertise (31.5%); and (3) not likely to experience any disaster disruption (24.4%). In addition, the top three reasons why medium enterprises did not prepare a written BCP were (1) the enterprise has not heard of BCP (38.5%); (2) lack of company BCP knowledge and expertise (36.8%); and (3) not likely to experience any disaster disruption (29.9%).

27 Findings 19 Figure 21 Reasons for not preparing a written BCP by small enterprises (n = 168) Has not heard of BCP 40.5% Lack of company BCP knowledge & expertise 31.5% Not likely to experience any disaster disruption 24.4% Lack of human resources to handle BCP preparation 23.2% Lack of information on procedure for preparing a BCP 22.6% Do not know 19.6% Lack of budget for preparing a BCP 17.9% No need for written BCP 14.3% The expected impact of disruption is less than BCP cost 11.9% Employee s awareness is low 6.0% BCP is impractical 3.0% Other 2.4% Management awareness is low 2.4% Difficulties coordinating within the company in preparing a BCP 1.8% 0 10% 20% 30% 40% 50% For large enterprises (see Figure 22), the top three reasons why they did not prepare a written BCP were (1) lack of company BCP knowledge and expertise (53.7%); (2) not likely to experience any disaster disruption (39.0%); and (3) lack of information on procedure for preparing BCP (29.3%).

28 20 SURVEY REPORT THAILAND Figure 22 Reasons for not preparing a written BCP by large enterprises. (n = 41) Lack of company BCP knowledge & expertise Not likely to experience any disaster disruption Lack of information on procedure for preparing a BCP Has not heard of BCP Lack of human resources to handle BCP preparation Do not know 7.3% 14.6% 29.3% 29.3% 39.0% 53.7% Lack of budget for preparing a BCP No need for written BCP 7.3% 4.9% Other 2.4% The expected impact of disruption is less than BCP cost 2.4% BCP is impractical 0.0% Difficulties coordinating within the company in preparing a BCP Employee s awareness is low Management awareness is low 0.0% 0.0% 0.0% 0 20% 40% 60% 80% 100% The study found that small and medium enterprises had similar reasons why they did not prepare a written BCP. The report also shows the concept of business continuity is still not widely popular among small and medium enterprises. However, it should be noted that all small, medium, and large enterprises also had limited knowledge and resources for BCP. In terms of reasons that would motivate an enterprise to develop a BCP, the top three answers of small enterprises were: (1) to avoid economic loss (63.7%); (2) customer s requirement (22.6%); and (3) BCP is a good business practice (17.9%), see Figure 23.

29 Findings 21 Figure 23 Reasons that would motivate small enterprises to develop a BCP (n = 168) To avoid economic loss 63.7% It is a customer s requirement BCP is a good business practice Because of a previous disaster experience To gain client s confidence 22.6% 17.9% 16.1% 15.5% Do not know 14.3% To protect employees 13.7% Fear of not being able to meet supply or service commitment if % It is legal or mandatory requirement 10.7% BCP will help us gain competitive advantage 10.7% It is prestigious to have BCP 9.5% An enterprise level BCP is needed to participate in area-level BCP 6.0% BCP is a symbol of reliability 5.4% If an employee will propose that we prepare a BCP Having BCP will attract more business 4.2% 3.6% Others 0.6% 0 20% 40% 60% 80% 100% Moreover, Figure 24 presents the reasons that motivate medium enterprises to prepare a BCP. The top three answers were: (1) to avoid economic loss (65.8%); (2) to be able to meet supply or service commitments if business is interrupted; and (3) customer s requirement (21.4%).

30 22 SURVEY REPORT THAILAND Figure 24 Reasons that would motivate medium enterprises to develop a BCP (n = 117) To avoid economic loss Fear of not being able to meet supply or service commitment if... It is a customer s requirement 21.4% 32.5% 65.8% BCP is a good business practice 21.4% To gain client s confidence 19.7% To protect employees 19.7% It is legal or mandatory requirement 16.2% Because of a previous disaster experience BCP will help us gain competitive advantage 14.5% 12% Do not know 6.8% An enterprise level BCP is needed to participate in area-level BCP Having BCP will attract more business 6.8% 6.8% It is prestigious to have BCP 6.8% If an employee will propose that we prepare a BCP 4.3% BCP is a symbol of reliability 3.4% Others 0.9% 0 20% 40% 60% 80% 100% In terms of large enterprises, the top three reasons that would motivate them to develop a BCP were: (1) to avoid economic loss (58.5%); (2) to gain client s confidence (46.3%); and (3) a customer s requirement (39%).

31 Findings 23 Figure 25 Reasons that would motivate large enterprises to develop a BCP (n =41) To avoid economic loss To gain client s confidence It is a customer s requirement Fear of not being able to meet supply or service commitment if... To protect employees 24.4% 34.1% 39.0% 46.3% 58.8% It is legal or mandatory requirement 12.2% BCP is a good business practice 12.2% Because of a previous disaster experience An enterprise level BCP is needed to participate in area-level BCP 9.8% 7.3% Do not know 4.9% BCP is a symbol of reliability 4.9% Having BCP will attract more business 4.9% It is prestigious to have BCP 4.9% If an employee will propose that we prepare a BCP BCP will help us gain competitive advantage 2.4% 2.4% 0 20% 40% 60% 80% 100% The study found that the top reasons to encourage small, medium, and large enterprises to prepare a BCP was to show them how BCP can help them avoid economic loss if a business disruption occurs. Other reasons of high frequency were related to customers. How to motivate enterprises to develop a BCP was to present a value of competitive advantage in BCP especially in meeting customer s requirement and having a higher ability to deliver products and services on time. Enterprises, especially those of a small size, also needs business continuity professionals to show how BCP is a good practice to enhance the standards in crisis management and emergency planning. If we can illustrate to enterprises that business continuity can improve organizational resilience, they will be likely to develop a BCP.

32 24 SURVEY REPORT THAILAND Enterprises with written BCP Based on the earlier results, Figure 17 shows only 10.8% of surveyed enterprises indicated that they had a written BCP. When compared between sizes of enterprises (see Figure 19), small enterprises reported the lowest adoption of BCP. In contrast, large enterprises reported the highest rate of possessing BCP. In terms of the year of first BCP preparation, six respondents indicated their enterprises prepared their written BCP during the year of 2011 which is the year of flood disaster in Thailand. One respondent also indicated a written BCP was prepared before the 2000 s. In the majority of cases where an enterprise had a BCP the respondents reported that plans had been prepared after Furthermore, there were currently 38 enterprises being in the process of developing written BCP at that time (see, Table 6). In addition, although half of those who already had a written BCP did not provide the answer, 19.6% of them indicated they had last BCP updated either in the year of 2014 or 2015 (see Figure 26). Table 5 The year in which enterprises first prepared their written BCP First BCP updated BCPs (no. of respondents) First BCP updated BCPs (no. of respondents) No answer In process 38 Figure 26 Distribution of year in which the respondents last updated BCP (N =46) 6.5% 4.3% No answer 19.6% % 19.6%

33 Findings 25 On the year of last BCP test, 30.4% of those who had a written BCP reported their last test on BCP was in 2014, and 15.2% of them tested their BCP last time in About 2.2 % of them reported the last BCP tested in 2011, 2012, and 2013 respectively. Almost half of them did not provide an answer (see, Figure 27). Figure 27 Distribution of year in which the respondents last tested BCP (n = 46) Did not answer 47.8% 2.2% 2.2% 2.2% 30.4% % Of those enterprises who had a written BCP, 47.83% of them had an organization chart showing the position of the BCP manager in the company, while 26.08% of them did not have one (see Figure 28). Figure 28 Do the respondents have an organization chart showing the position of the BCP manager in the company? (n = 46) 26.08% 47.3% 26.08% Have Don t have No answer In addition, 37% of those who had a written BCP reported their BCP had connected to the community or local disaster preparedness plan. In contrast, 39.1% of them indicated their plan did not connect to any communities or local disaster preparedness plans.

34 26 SURVEY REPORT THAILAND Figure 29 Are respondents BCP connected to the community or local disaster preparedness plan? (n = 46) 19.6% 39.1% 37.0% No Yes No answer In terms of hazards addressed by BCP (see Figure 30), the top hazards identified in BCP were: (1) flood (56.5%); (2) fire (47.8%); (3) power blackout (26.1%); (4) accident (19.6%); and (5) earthquake (13%). Although earthquake was not ranked in the top ten hazards which surveyed respondents reported (see Table 3), some enterprises had BCP for earthquake due to possibility of huge impact on business disruption. In addition, the top three reasons that motivated the enterprises to develop a BCP were: (1) to avoid economic losses (52.2%); (2) to gain clients confidence (41.3%); and (3) to protect employees (37%). These first top two answers were similar to the answer responded by those who did not have a written BCP shown in Figure 23, 24, and 25. Only those who had a written BCP were motivated or compelled by the reason of protecting employees.

35 Findings 27 Figure 30 Hazards being addressed by BCP (n = 46) Flood 56.5% Fire 47.8% Power blackout 26.1% Accidents 19.6% Earthquake 13.0% Data loss 10.9% Lightning 8.7% Pandemic/Epidemic 8.7% Civil unrest 6.5% Terrorism 4.3% Armed conflict 4.3% Cyber attacks 4.3% Transportation system breakdown 4.3% Landslide 4.3% Wildfire Volcanic eruption 4.3% Tsunami 4.3% Others 4.3% Water shortage or contamination 2.2% Theft 2.2% Foreign currency fluctuations 2.2% Typhoon 2.2% 0 20% 40% 60% 80% 100%

36 28 SURVEY REPORT THAILAND Figure 31 Reasons that motivate those who have BCP to develop the plan (n = 46) To avoid economic loss 52.2% To gain client s confidence 41.3% To protect employees 37% Fear of not being able to meet supply or service commitment if % It is a customer s requirement 19.6% Because of a previous disaster experience 8.7% It is prestigious to have BCP 8.7% BCP will help us gain competitive advantage 6.5% An enterprise level BCP is needed to participate in area-level BCP 4.3% It is legal or mandatory requirement 4.3% BCP is a symbol of reliability 4.3% BCP is a good business practice 4.3% Do not know 2.2% Having BCP will attract more business 2.2% 0 20% 40% 60% 80% 100% Of those who had a written BCP (see Figure 31), 54.3% of them had used their business continuity plan in actual disruption. Some of them found their BCP was useful (21.7%), and others found it was very useful (32.6%). About 26.1% of them never used their BCP, while 19.6% of them did not provide an answer.

37 Findings 29 Figure 32 Application of BCP in actual business disruption and how useful it was (n = 46) 26.1% 19.6% 54.3% 32.6% 21.7% Yes No answer No Very useful Useful In addition, when preparing a written BCP, 71.7% of these respondents did not receive support from the government in developing their business continuity plan (see Figure 32). Only 2.2% of them received support from the governments in terms of training supports and providing BCP guidebook or toolkit. Figure 33 Presence of government support in BCP preparation (n = 46) 26.1% 2.2% 71.7% No No answer Yes There were a variety of ways to prepare BCP (see Figure 34). About 15.2% of those who had a written BCP indicated they prepared BCP by referring to guidelines published by industry association or by searching the internet for BCP procedure. About 30.4% of surveyed respondents indicated other ways to prepare BCP. For example, some large enterprises have their BCP guideline from their international headquarter. Some respondents from automotive industry referred to guideline from their clients. Other enterprises referred to guideline from industrial estate where they were located in.

38 30 SURVEY REPORT THAILAND Figure 34 Method used in preparing BCP (n = 46) Others 30.4% Refer to guidelines published by the industry association Search the internet for BCP procedure Refer to guidelines published by the government Refer to guidelines published by NGOs Refer to guidelines of BCP standards e.g. ISO22301, BS2599, etc. 8.7% 8.7% 10.9% 15.2% 15.2% Hired consultants 6.5% Hired full-time employees with BCP experience or expertisr 6.5% Refer to textbooks 4.3% 0 10% 20% 30% 40% 50% Of those who had a written BCP, 58.3% of them often updated their BCP annually. About 20.8% of them updated their BCP when business environment changes. 12.5% of them never updated their BCP (see Table 9). In addition, there were a variety of costs in preparing BCP (Table 10). Four respondents reported they did not pay any costs to prepare their BCP. Six surveyed respondents indicated the cost in between THB 50,000 THB 100,000. One respondent reported an enterprise spent THB 80,000,000 in preparing business continuity plan. This business is located in Pathumthani province. The business experienced a disaster disruption by flood in 2011 and the cost of damage was THB 350 million. For number of days used in preparing BCP, 5 enterprises indicated they used 7 days to prepare their BCP. In addition, regardless the sizes of enterprise, 14 of those who had a written BCP spent no later than one month to prepare their BCP (see Figure 35). Figure 35 Frequency of BCP updated Annually 58.3% Semi-annually 4.2% Every two years 0.0% Every time after receiving training 4.2% When business environment changes 20.8% Not yet 12.5% 0 20% 40% 60% 80% 100%

39 Findings 31 Table 6 The cost in preparing BCP Thai Baht Respondents Thai Baht Respondents , , ,000, , ,000, ,000 3 Table 7 Number of days used in preparing BCP Number of days Respondents Number of days Respondents In addition, 54.3% of those who had BCP indicated they had good practices in BCP implementation or in disaster preparedness. In addition, about 37% of them were willing to share their good practices as exemplars for use by other SMEs as benchmarks or models in BCP implementation or SME disaster preparation (see Figure 36). Figure 36 Good practices in BCP implementation or in disaster preparedness (n = 46) 34.8% 10.9% 54.3% 37% 17.3% Yes No answer No Yes, willing to share good practice No, does not want to share good practice