Is investing in preparedness worth the effort?
The Disasters and Emergencies Preparedness Programme (DEPP) Learning Project, hosted by Action Against Hunger UK, commissioned a Return of Investment (ROI) study in October 2017, to assess whether investing in preparedness is worth the effort. The study is being undertaken by PricewaterhouseCoopers (PwC) and is due to finish in May 2018.
What does the study hope to achieve?
The study aims to review, test and improve the current Return on Investment methodology so that is applicable to Emergency Preparedness investments that focus on building humanitarian capacity. It is hoped that this will lead to a stronger and more compelling evidence base for increased investment in Emergency Preparedness, along with generating tools to support donors and humanitarian organisations’ decision-making and their ability to generate clear business cases for increased investment.
What’s the methodological approach?
Unlike an evaluation, which assesses a project once it has come to an end, the Emergency Preparedness Return on Investment model reviews actions and creates forecasts before a (hypothetical) emergency happens.
By taking this approach, the Return on Investment methodology allows us to determine the ‘expected return’ and the long term benefits of any given investment. As such, the Return of Investment methodology should be seen as a tool to appraise, rather than one utilised in evaluations.
All investments are analysed across a period of 10 years, and so the results of any Return on Investment study heavily benefit a portfolio view of investments and multi-year planning. For example, a ROI study should show the benefits and negatives of one investment over another and where the greatest possible returns can be achieved.
What has the team done so far?
The PwC team have so far undertaken two country visits in order to conduct several interviews and collect information. The first, in Ethiopia in November 2017, examined five separate investments from four different DEPP projects. The second, to the Philippines in February 2018, saw the team conduct six separate investments from seven different DEPP projects.
Investments, broken down further into collaboration, information, capabilities and processes, are analysed at individual, organisational, network and systematic levels. Using the Return on Investment methodology, these investments are assigned a rating based on their financial, time and response returns.
- Financial returns are based on the scale of financial savings in a given investment against the monetary size of the initial investment.
- Time returns are based on the assumption on the changes in the number of days the effected population take to get sufficient humanitarian aid in different humanitarian response events.
- Response returns are a qualitative measure of the investment and its contribution to emergency responses and indirect effects to the wider public.
So, does investment in preparedness work?
The emerging findings and the initial analysis of the data gathered in Ethiopia, and to a lesser extent the Philippines, has been cautiously positive, and specific investments in Ethiopia have generated large returns on the initial investment.
While the full report on the DEPP’s investments won’t be completed until May, both the DEPP Learning Project and the PwC team undertaking the study are looking forward to presenting the emerging findings of this study at the Preparing for Shock: Is Preparedness the New Frontier? conference on 14th & 15th March. We hope you’ll join the discussion!
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