Gina Cardenas and Giovanni Biasiucci*U sing data from the World Bank Business Ready (B-READY) 2024 project and the United NationsUniversity’s World Risk Index (WRI), this Brief finds that streamlined, transparent building regulationscan lower disaster risks across income levels––primarily by enhancing economies’ capacities toanticipate, prepare for, recover, and learn from natural shocks. This also helps firms reduce disruptionsto their operations. Yet building regulations alone are not enough. Accessible public services (such as digitalplatforms, hazard mapping, and simplified permitting processes) are essential enablers that lower the cost ofcompliance with regulations, encourage adherence, and help make buildings safer and more resilient. Together,sound and effectively enforced regulations and public service delivery foster a private sector and a businessenvironment that is more resilient to disasters—which, in turn, promotes long-term, sustainable economicgrowth. The Brief emphasizes that building regulations are not just a preventive measure but a vital adaptationstrategy that helps economies become disaster-ready and also more attractive to investors.Public Disclosure Authorized disaster-proneand rapidly urbanizing regions likeSub-Saharan Africa, Latin America and the Caribbean, andEast Asia and Pacific (figure 1). Building resilience for a competitive privatesector The increasing frequency and intensity of natural disastersand weather events pose significant risks to economiesworldwide (IPCC 2023), with far-reaching consequences forbusiness growth, investment, and job creation. Over the pastdecade, both high- and middle-income economies haveexperienced an estimated US$1.5 trillion in economic lossesdue to storms, floods, and other natural hazards. Individualcatastrophic events—like earthquakes in New Zealand andChile—have caused losses equivalent to up to 20 percent ofnational GDP (OECD 2014).Public Disclosure Authorized Evidence from the 2011 Great East Japan Earthquake(GEJE) illustrates this pattern clearly. A study of 1,300manufacturing firms found that physical damage to officebuildings was the primary source of disruption to theiroperations (Chujyo, Fujii, and Ishikawa 2013). This examplehighlights a wider trend: disasters often reveal weak spots ininfrastructure and regulations—but they can also promptmeaningful reform. Despite substantial losses, economiesmay respond to disasters by approving and implementingimproved, enforced building regulations. Amajor driver of these losses is the damage toinfrastructureand business capital,such as buildings,equipment, and inventory. This damage impairs businessoperations, supply chains (Dai and Tang 2024), investmentreturns (OECD 2014), business survival rates (Basker andMiranda2018;Zaveri,Gatti,and Islam 2024),andproductivity (Goicoechea and Lang 2023; Grover and Kahn2024; Jones et al. 2024). About 10 percent of firms aroundthe world reported damage to physical assets from extremeweather (such as storms, floods, droughts, or landslides) as of2023, according to the global average of World BankEnterprise Survey data. This share is particularly high inPublic Disclosure Authorized The case of Japan exemplifies this approach (box 1). Beingone of the world’s most disaster-prone countries has notprevented Japan from maintaining economic stability andsupporting private sector growth. This is largely attributed tocontinuous building regulatory upgrades anchored in adeeply institutionalized disaster risk management system,long-standing commitments to resilience to seismic shocks,andstrong coordination between national and localgovernments. These efforts have turned hard-earned lessonsinto a valuable global resource and benchmark for buildingresilience, particularly in developing countries. It is nocoincidence that updating resilient building standards and Figure 1 Extreme weather hits firms hardest in disaster-prone and rapidly urbanizing regions Box 1Building resilience in action: Japan’s comprehensive approach Japan’s long history of dealing with natural disasters––including 185 major events between 1995 and 2018 (Japan,Cabinet Office 2018)––has shaped an integrated disaster risk management system that ties building and infrastructureresilience directly to its competitiveness agenda, ensuring effective coordination between national and local governments(Kechichian, Takemoto, and Shin 2020; World Bank 2018a). Major disasters such as the 1923 Great Kantō earthquake, the 1995 Kobe earthquake, and the 2011 Great East JapanEarthquake (GEJE) have served as turning points for regulatory and policy innovation, significantly strengthening thepreparedness of Japan’s private sector. Each event prompted targeted reforms. For instance, the 1923 earthquake led tothe world’s first seismic clause in an Urban Building Law; the 1968–78 earthquake sequence resulted in the 1981 NewAnti-Seismic Design Standard; and the aftermath of the 2011 GEJE brought new measures such