Firms may face internal or external risks. While internal risks can be managed with the firm's existing tangible or intangible resources, some of the external risks are not problems that firms can overcome with their own resources. When faced with these risks, firms can only try to minimize their losses. Natural disasters can be referred to as such external risks. This study examines the impact of earthquakes, a type of natural disaster, on firms and supply chains. Earthquakes affect not only the firm or the country directly affected by the disaster, but also all supply chains, which have become more complex and sophisticated due to globalization. In order to create resilient supply chains, the shares of global firms during the earthquake process are analyzed and recommendations are developed.
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A disaster is defined by the United Nations Office for Disaster Risk Reduction (UNDRR) as “A serious disruption of the functioning of a community or a society at any scale due to hazardous events interacting with conditions of exposure, vulnerability and capacity, leading to one or more of the following: human, material, economic and environmental losses and impacts” (UNDRR, 2023). The Federal Emergency Management Agency (FEMA) defines a disaster as “a non-routine event that exceeds the capacity of the affected area to respond to it in such a way as to save lives; to preserve property; and to maintain the social, ecological, economic, and political stability of the affected region” (FEMA, 2003). In order for an event to be recorded as a disaster, the Centre for Research on Epidemiology of Disasters (CRED) requires the following four criteria to be met: (1) ten or more people have been recorded as dead, (2) 100 or more people have been affected, (3) a state of emergency has been declared, (4) an international call for assistance has been made (CRED, 2023). Although different types of disasters are defined by different organizations, three types are commonly used: natural, man-made and hybrid (Shaluf, 2007). Shaluf (2007) defines the first group of man-made disasters as the socio-technical group consisting of technological, transportation, stadia or other public places failures and production failures. The second group, warfare, is divided into two subgroups: national and international. Hybrid disasters are used for situations where there are known floodplains, an active volcano, or housing or factories built in an avalanche zone. Other forms of disasters are briefly discussed because this study focuses mostly on natural disasters. Despite the fact that every disaster has unique characteristics, it is important to carefully consider disaster types that have traits in common with the difficulties explored in this study. Natural disasters are catastrophic occurrences brought on by the forces of nature. It's common to refer to natural disasters as “Acts of God.” CRED categorizes natural disasters into six types: biological, climatological, extra-terrestrial, geophysical, hydrological and meteorological. The geophysical disaster type is divided into three subgroups: volcanic activity, earthquake and mass movement. Earthquake is divided into two subtypes: ground movement and tsunami. According to CRED data, 16543 natural disasters occurred worldwide between 1900 and 2023. Of these natural disasters, 1583 were earthquakes, and more than 31 million people lost their lives in the earthquake in the last century. Earthquakes that took place since the beginning of the 20th century caused 652,349 deaths in China, 225,170 in Haiti, 163,529 in Japan, 154,277 in Iran and 146,403 in Russia. In addition, it has been calculated that the earthquakes that took place in the same period caused 334 billion dollars of damage in Japan, 177 billion dollars in China, 142 billion dollars in Italy, 103 billion dollars in the USA and 45 billion dollars in Turkey.