It is a little-known irony that the ongoing meltdown of the global credit market occurred at about the same time that the world was actually commemorating the International Day for Disaster Reduction (Oct. 8, 2008). It may be a long shot to equate the global credit crunch with natural or human-made disasters, but many might be surprised to learn that they have many similarities.

Disaster is commonly defined as the serious disruption in the functioning of a community or a society causing widespread human, material, economic or environmental losses which exceed the ability of the affected community or society to cope with through its own resources. If we imagine the potential impact of the current credit crisis to the global economy and the well-being of the world's most vulnerable population, the above definition will probably hold true.

Ironically, an important lesson learned by one segment of society is not always learned by the other. But if we equate the credit crunch to a major sea floor earthquake, the resultant tsunami from the credit crunch has yet to occur and will actually happen at a relatively much slower pace than would have been the case with a natural earthquake.

There is still relatively plenty of time for the economic policy makers to learn from and adopt the lessons of recent responses to major disasters such as the China earthquake, Indian Ocean tsunami or hurricane Katrina. In natural disasters, time is usually what we don't have, but it does force governments to coordinate their responses. The credit crisis should in fact be considered a human-made disaster that will also require rapid and coordinated responses.

In the last four years alone, the world has actually gained many experiences in coping with natural disasters at a scale beyond imagination -- disasters which have resulted in major loss of lives and materials and have required coordinated actions from participants across the globe. True, the credit crisis is different in nature and may be at a larger scale, but many key principles in responding to natural disasters can still be applied.

First, any disaster always starts from a potentially damaging event called a hazard. It has generally become the responsibility of governments to help their communities identify hazards most significant to them. While a speculative credit market can be considered as a source of innovation, it would be the responsibilities of governments to help their public understand the "hazard" level of certain credit markets or products. Certainly a market-friendly terminology for "hazard" needs to be found, but a government that can provide "hazard" transparency to the public has not been in place and is a must.

Second, the impact of any hazard will be determined by the level of vulnerability of a particular group of the population. Vulnerability is commonly defined as the conditions determined by physical, social, economic and environmental factors or processes, which increase the susceptibility of a community to the impact of hazards. In the increasingly interconnected global capital and goods markets, a factory in one country may operate on capitals from and serving markets in different places across the globe.

But national governments may actually identify their industries which are considered as "vulnerable", such as factories employing large labor forces and producing essential goods. These "vulnerable" groups can either be less exposed to the "hazard" or be provided with a safety cushion. There will of course be some debates on who should be considered vulnerable, but it is usually the job of the country's political process to sort this out.

Third, the likelihood or probability of occurrence of negative consequences resulting from interactions between hazards and vulnerable conditions is an important factor commonly known as risk. It is indeed important to recognize that risks are inherent to the credit market, and as a matter of fact risk is the name of the game.

However, it is the responsibility of the public through their governments to ensure that their most vulnerable populations and their taxpayer money are not exposed to high risks intended for the credit market players.

Finally, the disaster management community has learned the hard way that the most effective prescription to deal with disaster is through risk reduction. This could be done through a combination of early warning systems, prevention, preparedness, contingency planning and emergency response, as well as a recovery system.

More recently this entire spectrum is considered an important factor in building overall community resilience to disasters. Perhaps it is time to consider financial crises as human-made disasters. They will occur from time to time, and the global community needs to build the proper governance and systems to mitigate them and to build overall community resilience.