Article Natural Disasters and Multinational Enterprises: In Denial and Unprepared, or Ready to Respond? Chang Hoon Oh 1 a , Jennifer Oetzel 2 1 University of Kansas, USA, 2 American University, USA Keywords: natural disasters, risk management, disaster preparation, climate change, resilience, multinational enterprises, Covid-19 https://doi.org/10.46697/001c.77303 AIB Insights Vol. 23, Issue 3, 2023 We identify potential opportunities for new insights as they pertain to natural disasters and to offer specific strategies and tactics for managing disaster risk. Given the increase in the number and severity of disasters in many parts of the world, learning to prepare for, and respond to, disaster risk is likely to become a critical core competency for managers over the coming years. The private sector is likely to play a vital role in mitigating disaster risk for the communities in which they operate. Companies that are better prepared may not only reduce business risk, but also maintain business continuity. INTRODUCTION When it comes to the increasing frequency and severity of natural disasters, are managers of multinational enter- prises (MNEs) in denial about the risk and unprepared or are they ready to respond? As statistical evidence and pop- ular press stories document the frequent occurrence of nat- ural disasters and their devastation on businesses and the communities in which they operate, this is a critical and po- tentially existential question every company needs to con- sider. Natural disasters are a unique grand challenge that cre- ate a growing set of risks for MNEs at the local, regional, and global levels, as well as new challenges for research on MNEs. Figure 1 shows the number of incidents and total es- timated amount of damage to property, crops, and livestock since 1960. The number and severity of disasters, while volatile, have been growing over the last several decades. This is due to several factors including increasing urbaniza- tion and climate change, among others (Howard-Grenville, Buckle, Hoskins, & George, 2014; Kolk & Pinkse, 2008; Oh & Oetzel, 2022; Perrow, 2011; Rivera, Oh, Oetzel, & Clement, 2022). Unlike other types of business risks – such as economic crises or political violence – natural hazards are often con- sidered as unmanageable risks; risks that are seemingly im- possible to avoid and over which individuals or organiza- tions have little control (Oetzel & Oh, 2021; Oh & Oetzel, 2011; Pearson & Mitroff, 1993; Slovic, 2000). This widely held viewpoint compromises disaster preparation efforts and increases the risk that managers of MNEs and their subsidiaries will be left flat footed in the event of disaster. In practice, there is much that managers can do to prepare but it requires a change in mindset. Figure 2 shows the incidents (a proxy of natural hazards) and number of people killed per 1,000 in the population (a proxy of natural disasters) by natural disasters across the world in the 1960s and 2010s. The number of people killed per 1,000 in the population has increased for several African and European countries, Japan, Philippines, and Russia, while it has decreased for North America, Latin America, and several Asian countries, including Australia. Considering the number of incidents has increased during this period in most countries, the differential patterns in these countries deserve attention. Notably, China, Indone- sia, and the U.S. have very high numbers of incidents, but low numbers of people killed per 1,000 in the population in 2010s. In contrast, Russia has low number of incidents, but high number of people killed per 1,000 in the population. One explanation for the variation in disaster deaths across countries is that certain locations may be prone to higher intensity events. Also, some countries are better prepared for disasters than others (Oetzel & Oh, 2021). For example, building codes are not always enforced (a func- tion of corruption and/or poor code enforcement) so ma- jor structures may not be able to withstand certain types of natural hazards (Zilio & Ampuero, 2023). Reports sug- gest that this is one of the reasons that there were so many deaths after the earthquakes in Turkey in February 2023 (Bilginsoy & Fraser, 2023). While managers are unlikely to have an influence on the institutional issues that exacer- bate risk, if they recognize the potential threats, they can mitigate them. Thus, regardless of the characteristics and the location of disasters, effective disaster planning and corresponding author: changhoon_oh@ku.edu a Oh, C. H., & Oetzel, J. 2023. Natural Disasters and Multinational Enterprises: In Denial and Unprepared, or Ready to Respond? AIB Insights, 23(3). https://doi.org/10.46697/ 001c.77303.