Key Issues > Disaster Management
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Disaster Management

Disasters—natural and man-made—can suddenly and unpredictably devastate communities and cripple regional economies. Preparation, response, recovery, and mitigation efforts for disasters are typically costly and involve many federal programs and agencies, other levels of government, and the private and nonprofit sectors.

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In recent years, federal, state, and local governments have faced unprecedented costs for disaster response and recovery. The federal government obligated nearly $300 billion across numerous departments and agencies during fiscal years 2005 through 2014 for disaster assistance. Extreme disasters like Hurricanes Katrina and Sandy caused billions of dollars in damage. The rise in number and increase in severity of disasters is a key source of federal fiscal exposure.

Examples of damage from Hurricane Sandy

Examples of damage from Hurrican Sandy

There is significant concern that this trend will continue. According to the United States Global Change Research Program and the National Academy of Sciences, certain previously rare weather events—such as extreme heat and heavy precipitation—will become more common and intense due to changes in the climate, leading to more costly damage. In addition, other effects of climate change, such as sea level rise, could also increase vulnerability to the effects of weather events.

Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change Risks is a High Risk area in part because of concerns about the increasing costs of disaster response and recovery efforts. Building disaster resilience by taking actions to mitigate vulnerabilities and adapt to the effects of climate change is one strategy to help to limit the nation's fiscal exposure.

The Federal Emergency Management Agency (FEMA) is the lead federal agency responsible for disaster management. To be good stewards of federal funds and ensure effective and efficient operations, it is important that FEMA employ sound management practices and ensure the effectiveness of its own operations as it carries out its disaster management missions, including things like managing its information technology, workforce, and logistics systems to support disaster response and recovery; and ensuring the most appropriate distribution of federal resources by controlling administrative costs and effectively managing the disaster declaration process.

The federal government's role as the insurer of property and crops that are vulnerable to natural disasters drives a large part of disaster-related fiscal exposures. For example, FEMA's National Flood Insurance Program (NFIP) is intended to limit the damage and financial impact of floods. However, it has not generated sufficient revenues to pay claims, and as of April 2016, still owed $23 billion of what it borrowed from the Treasury. The Biggert-Waters Flood Insurance Reform Act of 2012 contained provisions to help strengthen the financial solvency of the program, including phasing out some discounted insurance premiums. However, the Homeowner Flood Insurance Affordability Act of 2014 reinstated some premium subsidies and slowed down some of the premium rate increases from the Biggert-Waters Act. While Congress should continue to consider changes to the program addressing the competing goals of solvency and affordability, action such as improving financial controls and the accuracy of full-risk premium rates, overseeing private insurers and contractors, and better managing NFIP are all potential strategies  FEMA can use to improve its efforts to address the fiscal exposure of the program and ensure that NFIP funds are used effectively.

Although FEMA has lead federal responsibility for disaster management, it operates across a range of federal, state, local, and nongovernmental entities that have specific authorities, resources, expertise, and interests. In this regard, FEMA advocates a "Whole of Community" approach to disaster management that includes individuals, families, communities, the private and nonprofit sectors, faith-based organizations, and local, state, tribal, territorial, insular areas, and other federal agencies. Issues such as how states and localities plan and budget to mitigate, respond to, and recover from disasters are vital to the nation's overall state of preparedness.

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