Blockchain In Disaster Relief: Providing Transparency And Efficiency In Times Of Crisis

Table of Contents

Introduction

The COVID-19 pandemic has quickly spread since the first cases were discovered near the end of 2019. It has reached the level of a global disaster, with impacts in almost every part of the world (Haghani et al. 2020; Song et al. 2022). These impacts are wide-ranging, with the most obvious directly tied to human health, but extending throughout the social and economic domains (Chen et al. 2021). To overcome this current worldwide catastrophe, as well as to prepare for future disasters, policy makers have employed a range of social and economic measures. There are some parallels in the responses to COVID-19 as to previous catastrophes and natural disasters.

In the twentieth century, approximately sixty million people lost their lives due to natural disasters. In the 1990s, it is estimated that an average of 79,000 people went missing annually due to natural disasters. Natural disasters have continued to be a major problem in the twenty-first century. As a result of 6,681 natural disasters between 2000 and 2019, 510,837 deaths occurred and 3.9 billion people were affected (UNDRR 2020). In just the first half of 2022, 187 disaster-related events were recorded in 79 countries. Even in that short time period, disaster-related events led to at least 6,000 deaths, 50 million people affected, and total damage estimates exceeding 40 billion US dollars (CRED 2022a). Thus, deadly effects related to natural disasters have been, and remain, a problem of the most utmost concern.

Natural disasters constitute a particularly severe problem for developing countries, including social, economic, and long-term developmental losses (Mechler 2003). When measured relative to GDP, losses in developing countries during the twenty years between 1980-1999 amounted to 13.3%, compared to just 2.5% in the developed world (CRED 2003). For example, Turkey has historically faced a number of natural disasters. Earthquakes affected an estimated 655,358 people in Turkey in the 2000-2018 period, representing a large proportion of the total number of people impacted by all natural disasters in Turkey during that time period (CRED 2022b). Natural disasters are particularly devastating when they occur in densely populated and industrialized areas, such as the 1999 earthquake in Kocaeli, Turkey. The release of hazardous substances following the Kocaeli earthquake caused long-term off-site effects to surrounding infrastructure, including to an oil refinery and fertilizer plant (Steinberg and Cruz 2004).

One of the key challenges in responding to, and preparing for, disasters is managing uncertainty. Uncertainties are present in myriad daily operations and the activities associated with them (Nevins and Choi 2018; Whitman and Mattord 2017), but often become particularly pronounced during emergencies. If not properly managed, uncertainty can cause operational failures in supply chains (Whitman and Mattord 2017), which supply chain management experience during COVID-19 has unfortunately shown. Due to the increasing levels of uncertainties and complexities in today’s globally interconnected business environment, measuring and managing risk has become a vital issue in supply chains. Risk management initiatives, especially those based on information technologies, have been growing exponentially in recent years (Pournader et al. 2020). Based on virtual panel discussions with supply chain executives, interviews, and publicly accessible data points concerning COVID-19’s influence on the supply chain, van Hoek (2020) identified supply and demand vulnerabilities in supply chains during the COVID-19 crisis. The key supply risks included “overreliance on single/few factories for suppliers”, “lack of alternative sources”, and “lack of local sourcing in the supply chain”, while the key demand risks included “lack of information sharing throughout the supply chain” and “lack of information technology to improve visibility into demand and transparency of inventory”. As a third, and final, example, Collins et al. (2020) argued that risk governance associated with COVID-19 consists of technical appraisal, risk awareness, management, and communication.

Risk management plays a critical role in reducing the impact of disasters. Among its many benefits are to identify and evaluate the potential effects of disasters, to establish early warning systems, and to put in place potential response mechanisms, such as financing arrangements, prior to their occurrence. Effective risk management involves the participation and coordination of many players. For example, governmental and non-governmental organizations can contribute to Disaster Risk Management (DRM) by providing administrative, technical, and social assistance to overcome capacity challenges (Spataru 2019). Modern technological developments can facilitate effective planning and implementation in DRM.

Risk management is therefore one of the foundations to eliminating or mitigating the impact of disasters. Existing research has discussed the significance of risk management in addressing the COVID-19 pandemic. For example, Chatterjee et al. (2020) argued that effective risk management is a crucial tool to control the COVID-19 pandemic. They argued that since it promotes public awareness, trust, acceptance, and compliance with the measures, risk communication is a crucial component of risk mitigation strategies. They also argued that risk communication employs a variety of communication methods, including mass media, social media, and community participation. The authors proposed an innovative risk assessment tool designed specifically for the COVID-19 pandemic, which is comprised of factors such as health, behavior, exposure, and social policy.

DRM has long been the subject of close attention by academics and practitioners. One of the most prominent global frameworks for disaster risk reduction is the Sendai Framework. The Sendai Framework recognizes the important role technology plays in DRM, and urges investment in innovation and technology development for DRM (Izumi et al. 2019). There are many technologies that can potentially support DRM, and different technologies can be more or less applicable in different contexts. However, one technology that has received growing consideration in the literature and practice is blockchain. Blockchain technology (BcT) presents great potential to build trust and remove corruption by providing transparency as well as accountability in commercial and humanitarian operations and supply chains (Ozdemir et al. 2021). It is also well suited to tackle the complexities of DRM, and several authors have recently completed studies regarding the use of BcT in risk management, such as Ma et al. (2018), Nevins and Choi (2018), Buonpane (2018), Sarich (2019), Minges (2019), Li et al. (2020), Etemadi et al. (2021), and Lee et al. (2021).

The COVID-19 pandemic has shown the need for an improved DRM approach based on the implementation of new technologies (Craighead and Ketchen 2020; Forman et al. 2020). As noted above, several researchers (Sarkis et al. 2020; Rowan and Laffey 2020; Govindan et al. 2020; Bakalis et al. 2020; Raturi and Kusum 2020) have investigated the effects of the COVID-19 pandemic on supply chain management. Even a cursory review of the rapidly growing literature on the impact of COVID-19 on supply chains underlines the role of technology plays in responding to it. The main findings of these studies are presented in Table ​Table11 as follows:

Regardless of the type of disaster they face, communities need to build their disaster resilience, which indicates an ability to recover quickly from a negative external shock (Briguglio et al. 2006). The COVID-19 pandemic has also underlined the need for measures that enable building national and organizational resilience (Bryce et al. 2020) representing several stages of mitigation, response, and recovery. Friedland (2005) defines national resilience as “the ability of a society to withstand adversities and crises, such as natural disasters or national security events (wars or terror attacks) in diverse realms by implementing changes and adaptations without harming society’s core values and institutions.”

Fabri and Fabri (2019) and White et al. (2020) specifically argued that BcT has potential in building resilient ecosystems, including its potential role in disasters and disaster risk reduction. For example, auditing challenges may occur for government, insurers, donors, and beneficiaries due to the numerous procedures and activities that are generally carried out quickly amid a disaster. BcT can help address those challenges by providing an irreversible and verifiable audit trail of transactions for each digital or physical object. Since BcT can be verified, the likelihood of fraudulent operations is decreased, thus raising transaction authenticity (White et al. 2020). As a second example, keeping track of disaster-related damages is very difficult. BcT makes it possible to program pre-agreed conditions through smart contracts, which are carried out automatically after specific requirements are met. Smart contracts can be used to conduct transactions related to disasters. Thus, DRM in response to the COVID-19 pandemic requires employing innovative approaches, such as BcT, towards building national and organizational resilience. To this end, for example, Choi et al. (2019) proposed a framework that facilitates risk analysis using blockchain in air logistics. Their research is the first to cope with such risks using blockchain. Pagano et al. (2019) developed a novel smart insurance contract to address the impact of natural hazards. In another study, Joshi et al. (2022) explored the critical success factors for developing humanitarian activities during the COVID-19 pandemic. To achieve this, they used fuzzy DELPHI and DEMATEL. Finally, they concluded that building a blockchain-based humanitarian network is the most significant critical factor (Choi et al. 2019; Pagano et al. 2019; Bryce et al. 2020; Grima et al. 2021; Joshi et al. 2022). Fabri and Fabri (2019), Munawar et al. (2022), Omar et al. (2022), and Sahal et al. (2022) stated that new research is needed to reveal how practically disruptive technologies, including BcT can be used to reduce disaster risk and improve resilience. The main aim of this study is to systematically explore the role of BcT in DRM operations as a response to the COVID-19 pandemic. Therefore, the main research questions (RQs) of this inquiry are as follows:

RQ1. What factors should be considered to assess the applicability of BcT in DRM in response to the COVID-19 pandemic?

RQ2. Which sub-dimensions of DRM should be addressed through BcT in response to the COVID-19 pandemic?

RQ3. Which particular operations of the most blockchain friendly sub-dimensions can be improved using BcT?

This study makes two key contributions. First, while there is a growing body of research on BcT, the dimensions of DRM, and responses to COVID-19, the novelty of this study is in studying these issues in combination. To this end, it makes a contribution to the existing literature by quantitatively assessing the applicability and feasibility of BcT in the dimensions of DRM during the COVID-19 pandemic using expert opinions. This study discusses the impact of BcT benefits on the specific activities involved in the most BcT friendly dimensions of DRM using a MCDM framework in the context of the COVID-19 pandemic. The findings resulting from IF-MCDM through expert analysis provide needed insight on how decision makers can determine where BcT is most appropriately utilized in response to COVID-19, in particular, and in DRM, more generally.

The remaining sections of this paper continue as follows: Sect. 2 discusses the theoretical framework, focusing on the relationships between DRM, BcT, and COVID-19. Section 3 introduces the proposed decision framework and methodology, as well as the rationale for using the integrated methods selected in this study. Section 4 provides the application and results, followed by Sect. 5 addressing the discussion and implications. Finally, Sect. 6 provides the conclusion, along with the limitations of this research and some recommendations for future research.

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