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Risk & Resilience Practice

Building resilience:
The history and future of
US crisis management
The crisis management community has made great progress on
building resilience in the past two decades, but much work remains to
prepare for a future of more frequent and damaging disasters.

by Tony D’Emidio, Zoe Fox, Jon Spaner, and Ophelia Usher

© Michael Dunning/Getty Images

August 2022
Two decades have passed since the tragic events of next two decades may bring more frequent and
9/11 and the subsequent implementation of the worse disasters affecting more people. We then
Homeland Security Act of 2002. This landmark explore five questions that the community can
legislation spurred the largest reorganization of consider to ensure the security, resilience, and
the US federal government since the National prosperity of communities in the future.
Security Act of 1947, uniting the Federal Emergency
Management Agency (FEMA) with 21 other
organizations under the newly created Department Over the past 20 years, the US
of Homeland Security (DHS).1 disaster management community
has made significant strides
Since 9/11, the crisis management community has In the two decades since the passage of the
made great strides in addressing the negative Homeland Security Act, the US crisis management
impacts of disasters on American lives and community has made progress in helping people
livelihoods. Congressional appropriations for before, during, and after disasters (see sidebar, “The
disaster response and recovery have increased to stages of disaster management”). It is important to
historic levels, with FEMA allocating $45 billion acknowledge the many advancements of the past
between 2017 and 2020 to disaster relief and several years, including improved disaster
financial aid.2 New approaches to recovery and management structures and higher levels of funding.
mitigation have emerged, including the development
of the National Response Framework and the DHS has developed and implemented national
Building Resilient Infrastructure and Communities response structures that have improved and
(BRIC) grant program. Federal and state, local, tribal, streamlined how local, regional, and national disaster
and territorial (SLTT) agencies are more integrated responders serve communities. For instance, it
and coordinate more effectively. Indeed, the past launched the National Incident Management System
two decades have seen significant progress. Yet (NIMS) in 2004 as a preparedness and response
new challenges are emerging, and the crisis management model designed to standardize and
management community will need to work hard to unify response operations.3 Similarly, FEMA was
overcome them over the next 20 years. instrumental in the creation of the National Response
Framework (NRF), which articulated a set of
In this article, we acknowledge the significant overarching emergency principles to assist in
progress made by the crisis management coordinating multiagency and multijurisdictional
community since the signing of the Homeland responses to disasters.
Security Act and review the data suggesting that the

We explore five questions that the crisis


management community can consider
to ensure the security, resilience, and
prosperity of communities in the future.

1
Public Law 107–206, US Congress, November 25, 2002; The Federal Emergency Management Agency, FEMA, November 2010.
2
Andrew Hurst, “Which states depend the most on FEMA’s aid?,” ValuePenguin, updated June 18, 2021.
3
National incident management system, US Department of Homeland Security, December 2008.

2 Building resilience: The history and future of US crisis management


FEMA and the federal government have also The stages of disaster management
significantly expanded resources for disaster relief
and preparedness. FEMA’s public assistance
Disaster management functions are often
program, for instance, was 23 percent larger during
grouped into four overlapping phases1:
2010–19 than during the previous decade (2000–
09).4 Between 2017 and 2020, FEMA allocated
— Mitigation. These are actions taken to
$45 billion in disaster relief and financial aid to
prevent or reduce the consequences
communities across the country, of which about
of disasters.
80 percent had been spent by June 2021.5 Additionally,
since 2002, FEMA has provided more than
— Preparedness. This is planning
$52 billion in grants to support state and local
and training implemented for
preparedness investments.6
disaster events that cannot be entirely
mitigated.
However, FEMA is not the only key player in crisis
management at the federal level. According to a report — Response. This means assisting
from the Pew Charitable Trusts, FEMA’s Disaster Relief affected populations in the immediate
Fund, a key funding source for disaster response and aftermath of a disaster.
recovery, represented 44 percent of federal disaster
funds from 2005 to 2014. The remaining 56 percent — Recovery. These are restoration efforts,
was drawn from the budgets of 17 major federal typically following a disaster.
departments and agencies, including the Department
of Agriculture, the Department of Housing and Urban
Development (HUD), the Department of Defense 1
Definitions adopted are based on “Glossary of terms,”
(DOD), the Department of Transportation (DOT), and FEMA, accessed July 7, 2022.

the Department of Health and Human Services


(HHS). Other agencies include the Environmental
Protection Agency (EPA) and the Small Business
Administration (SBA).7 disasters, as well as increased exposure of
individuals and infrastructure to major risks.
These new structures and investments illustrate
the US government’s progress in responding to Research suggests that the number of weather-
disasters over the past two decades. and climate-related disasters, such as hurricanes,
flooding, and wildfires, is on the rise. In 2021 alone,
in the midst of the COVID-19 pandemic, the United
The next two decades will likely States endured Hurricane Ida, a catastrophic heat
witness more frequent and worse wave in the Pacific Northwest, and an extended
disasters affecting more people forest fire season in California. Indeed, billion-dollar
The increased spending on disaster relief and weather and climate disasters in the United States
preparedness is driven, in part, by a greater increased from two to three per year in the early
awareness of the importance of disaster 1980s to 22 events in 2020. In fact, 2020 broke
management since 9/11. But another driver has previous records from 2011 and 2017—but 2020 was
been the increasing frequency and severity of not an outlier.8 The average number of billion-dollar

4
“ OpenFEMA dataset: Public assistance funded project details – v1,” FEMA, updated July 17, 2022; Colin Foard, “How states can manage the
challenges of paying for natural disasters,” Pew Charitable Trusts, September 16, 2020.
5
“Which states depend,” updated June 18, 2021.
6
Federal Emergency Management Agency budget overview, Department of Homeland Security, 2021.
7
Colin Foard, “Federal disaster assistance goes beyond FEMA,” Pew Charitable Trusts, September 29, 2017.
8
“Billion-dollar weather and climate disasters” are defined as disasters due to weather or climate with overall inflation-adjusted damages
or costs reaching or exceeding $1 billion. For more, see “Billion-dollar weather and climate disasters,” National Centers for Environmental
Information, accessed July 7, 2022; see also Adam B. Smith, “2020 U.S. billion-dollar weather and climate disasters in historical context,”
National Oceanic and Atmospheric Administration (NOAA), January 8, 2021.

Building resilience: The history and future of US crisis management 3


events over the past five years is roughly 16 per year, end of its expected lifetime.14 According to the World
with each costing an average of $120 billion. Economic Forum, the United States ranked 13th
globally for infrastructure quality in 2019, down from
Similarly, disasters on average have become fifth in 2002.15
more severe. According to data collected by the
National Oceanic and Atmospheric Administration, Chronic underinvestment contributes to the country’s
accumulated cyclone energy (ACE), a proxy for infrastructure challenges. In its 2021 “report card”
hurricane activity, has risen noticeably since the on American infrastructure, the American Society
1950s. And eight of the ten most active years for of Civil Engineers estimated that the United States
ACE have occurred since the mid-1990s.9 faces an infrastructure investment gap of nearly
$2.6 trillion this decade that, if unaddressed, could
The same trend can be seen with wildfires. cost $10 trillion in lost GDP by 2039.16
According to data reported by the National
Interagency Coordination Center, an average of Gaps in infrastructure spending can have serious
70,072 wildfires have burned an average of 7 million ramifications for disaster management. As a
acres of territory a year since 2000. This figure is National Academy study explains, “If a community
more than double the average annual acreage has weakened infrastructure, like a human body
burned in the 1990s (3.3 million acres).10 with a compromised immune system, it will not
withstand trauma as well as one in good health.”17
At the same time, a rising number of Americans are The disaster community can think about how
exposed to disaster harms, exacerbating the impact mitigation and preparedness can strengthen
of these trends. The real estate firm Redfin found national infrastructure so that communities can
that the population of the 50 US counties most better respond to the trauma of disasters.
prone to heat, drought, fire, floods, and storms grew
from 2016 to 2020, while the 50 counties with the
lowest risk saw populations decline.11 Additionally, The disaster management community
maps from climate data analysts at First Street can answer five questions to help prepare
Foundation show that 70 percent more buildings in communities for future disasters
the United States are vulnerable to flood risk than The United States experienced 230 events
previously thought.12 And without question, lower- presidentially recognized as emergencies or
income communities are at greater risk during disasters in 2020, surpassing the previous high of
disasters.13 Moreover, they receive disproportionately 128 declarations in 2011. And the country will likely
less relief funding than other communities. face more frequent and worse disasters over the
next 20 years than it faced in the past 20 years.
Risks from climate- and weather-related disasters
are also amplified by the state of the nation’s To continue to protect people’s lives and livelihoods,
infrastructure. The population of the United States the crisis management community could reevaluate
has more than doubled since the 1960s, when most the roles and responsibilities of major stakeholders,
of the country’s major infrastructure was designed, including federal and SLTT organizations, as well as
and much of this infrastructure is now reaching the communities, individuals, and private-sector

9
“Climate change indicators: Tropical cyclone activity,” US Environmental Protection Agency, updated April 2021.
10
“Wildfire statistics,” Congressional Research Service, updated June 1, 2022.
11
Lily Katz and Sebastian Sandoval-Olascoaga, “More people are moving in than out of areas facing high risk from climate change,” Redfin News,
updated September 8, 2021.
12
“Flood Factor,” Risk Factor, accessed July 18, 2022.
13
G
 reater impact: How disasters affect people of low socioeconomic status, Substance Abuse and Mental Health Services Administration
(SAMHSA) and Disaster Technical Assistance Center (DTAC), July 2017.
14
James McBride and Anshu Siripurapu, “The state of U.S. infrastructure,” Council on Foreign Relations, updated November 8, 2021.
15
The global competitiveness report 2019, Country Profile: United States (p. 582), World Economic Forum, 2019.
16
2021 report card for America’s infrastructure, American Society of Civil Engineers, December 2020.
17
Disaster Resilience: A National Imperative, illustrated edition, Washington, DC: National Academies Press, 2012.

4 Building resilience: The history and future of US crisis management


institutions. The community can also consider Another area in which improved coordination could
how best to ensure that all peoples’ lives and occur is long-term recovery efforts. The Government
livelihoods are better protected and preserved Accountability Office has targeted long-term
with available resources. recovery as an area in which coordination challenges
are particularly acute, largely due to complex
In light of these considerations, the crisis manage- documentation requirements that slow down local
ment community can collectively answer partners’ efforts.19 Streamlining requirements and
five questions to help ensure success over the developing better frameworks for long-term recovery
next two decades. coordination could prove a particularly fruitful area for
improving efficacy over the next two decades.
Question 1: How can federal and SLTT
agencies coordinate and collaborate to spur Funding uncertainty is another major variable and
successful outcomes? friction point. For example, funding from HUD’s
Disaster management must succeed across a disaster recovery block grants is contingent on ad
complex stakeholder environment, with some of hoc congressional appropriations. As a result, crisis
the most engaged and influential responders managers have limited lead times or visibility into
being the federal government and state and local budgets to plan and coordinate their efforts. Policy
agencies. In the United States, government disaster makers could consider more stable funding models
response is coordinated across local, state, and here and elsewhere to facilitate better strategic
federal agencies through NIMS. Once a federal planning and coordination among partners.
emergency has been declared, FEMA normally
becomes the lead agency coordinating the Finally, with the rise of big data and greater
response, with HUD, the SBA, and numerous other technological proficiency throughout the disaster
stakeholder agencies also playing key roles, management community, there could be new ways
including ensuring equity during long-term recovery. to leverage technology to assist in response
coordination and collaboration. For instance,
The consequences of poor coordination can be technology could be used to identify people who are
serious. FEMA cited lack of coordination as a major currently missing opportunities for assistance or
failing following Hurricane Sandy in 2012.18 The who are least prepared for a disaster within a
result was widespread confusion. community. Such information could help target
emergency response and assist in matching
Over the next two decades, the community can resources to those in need.
improve coordination of crisis management in a few
primary ways. Question 2: What role could the private sector
play in mitigation, preparedness, response,
Clarifying roles can improve coordination and and recovery?
collaboration across federal, state, and local Too often, crisis management is seen as a public-
agencies. In the midst of disaster recovery and sector endeavor, usually led by FEMA with
response, it can be difficult to determine which coordination from state and local agencies and first
entity owns a particular task and how best to liaise responders. However, the private sector can serve
with other stakeholders. Crisis managers at all levels an important role across all aspects of disaster
could take the lead in engaging with policy makers management, from mitigation and preparedness to
to clarify roles and responsibilities across levels to response and recovery.
meet future demands; they could also lead in
adjusting existing coordination models where About 40 percent of all US fixed assets are held by
appropriate to ensure that communities are better the private sector, according to the Bureau of
served during and after disasters. Economic Analysis.20 And according to data from

18
Hurricane Sandy FEMA after-action report, Federal Emergency Management Agency (FEMA), July 1, 2013.
19
Disaster recovery: Recent disasters highlight progress and challenges, US Government Accountability Office, October 22, 2019.

Building resilience: The history and future of US crisis management 5


the Bureau of Labor Statistics, as of January 2022, research to develop more sophisticated premium
the private sector employs more than 129 million models to help contain risk and improve resilience,
Americans, representing about 80 percent of the US ultimately saving time and resources for insurers
labor force.21 Moreover, the private sector can play a and homeowners. The National Flood Insurance
pivotal role in formulating disaster-related incentive Program, for example, offers insurance discounts of
structures—especially through insurance markets— up to 45 percent based on the Community Rating
that influence behaviors and approaches related to System—a voluntary incentives program that
risk. Absent engagement from the private sector, encourages communities to exceed the minimum
the United States will not reach its full potential in floodplain management requirements.25 Private
terms of resilience. insurers could replicate this model. Similarly, the
California Earthquake Authority offers premium
Indeed, in the United States, successful approaches discounts of up to 25 percent for seismic retrofits to
to preparedness, recovery, and response have often support mitigation efforts.26
involved the private sector, and several companies
have made significant efforts to highlight the Another way that private-sector institutions can
importance of disaster management and assist in support crisis management and long-term recovery is
recovery efforts. The home improvement retailer by using their platforms to communicate to the public
Home Depot, for instance, partners with FEMA to about the importance of preparing for, responding to,
offer preparedness workshops, supply checklists, and recovering from disasters. The private sector
and guides to help people prepare their properties could encourage individuals to undertake resilience
for extreme weather, while Walmart uses its website efforts in their local communities and to assist in
to promote preparedness among employees and to disaster response and recovery.
provide tips on preparedness and other disaster
information.22 Numerous companies have provided Question 3: How can the community
significant funding to support disaster relief and encourage more individuals to assist with
recovery. For example, Bank of the West, eBay crisis management?
Foundation, and General Motors are among the Crisis management is not only for the public and
major donors to the Center for Disaster Philanthropy’s private sectors. Individuals can play an active role in
recovery fund.23 And the private sector has increased mitigation, preparedness, response, and recovery. To
its contributions to disaster relief in recent years: date, much of the community’s focus at the individual
the share of disaster relief contributions from the level has been on response. But the disaster
500 largest US companies increased from less than management community has the potential to play a
20 percent in 1990 to more than 95 percent in 2014.24 more active role in helping individuals with
preparedness, which is arguably where they could
However, the private sector could play an even play the largest role. Indeed, individuals sometimes
bigger role in disaster management. One action the make disasters worse through actions including
sector could take is to provide incentives for people failing to invest in resilience for homes in at-risk areas,
to live in areas less exposed to risk. In many cases, failing to clear brush on properties in areas prone
resilience investments are more cost-effective than to wildfires, or neglecting to develop reasonable
disaster relief and recovery investments. For preparedness plans for natural disasters.
instance, companies could harness evidence-based

20
 aken as a percentage of private nonresidential fixed assets out of total fixed assets for 2020. For more, see “National income and product
T
accounts,” US Department of Commerce Bureau of Economic Analysis, updated August 19, 2021.
21
“Employment, hours, and earnings from the Current Employment Statistics Survey,” US Bureau of Labor Statistics, as reported by FRED
Economic Data, accessed July 8, 2022.
22
Anita Chandra, Shaela Moen, and Clarissa Sellers, What role does the private sector have in supporting disaster recovery, and what challenges
does it face in doing so?, RAND Corporation, 2016.
23
“CDP disaster recovery fund,” Center for Disaster Philanthropy, accessed July 8, 2022.
24
“Giving after disasters,” Harvard Business Review, January 2019, Volume 97, Number 1.
25
National Flood Insurance Program: The current rating structure and risk rating 2.0, Congressional Research Service, updated April 4, 2022.
26
“Brace and bolt grants,” California Earthquake Authority, accessed July 8, 2022.

6 Building resilience: The history and future of US crisis management


Over the next two decades, the disaster
management community could
encourage the public to assist with
crisis management by reviewing
the effectiveness of existing programs.

Over the next two decades, the disaster Question 4: What is the right level and mix of
management community could encourage the investments for crisis management?
public to assist with crisis management by reviewing Determining the right investment mix for crisis
the effectiveness of existing programs. One current management is essential—and difficult. In addition
program is FEMA’s Community Emergency to understanding the right level and mix of
Response Team (CERT) program, which educates investments needed to support response and
volunteers about disaster preparedness. CERT recovery, it is particularly important for the crisis
volunteers are often called upon to assist first management community to understand what is
responders during emergencies. The crisis needed to improve resilience (that is, for mitigation,
management community could review CERT’s prevention, and preparedness).
effectiveness in order to identify best practices that
could be scaled throughout CERT (and in other similar According to a 2019 report from the National Institute
programs) to engage as much of the public as of Building Sciences, every dollar invested by the
possible during preparedness and response. Another federal government in mitigation saves society $6 in
important program, FEMA’s Youth Preparedness recovery costs.27 Despite this, resilience necessarily
Council (YPC), created in 2012, could improve the competes with immediate spending needs such as
pipeline to critical disaster management occupations. education and healthcare, as well as with urgent
response and recovery activities. Accordingly,
The crisis management community also could educate resilience investments are often difficult to prioritize,
the public about mitigation and preparedness and especially since policy makers often see them as
provide incentives for investing in such efforts for their expensive, short-term costs.
properties and places of work. One existing model is
the Florida Office of Insurance Regulation, which The Stafford Act (1988), which forms the key
requires all residential-property insurers in the state to legislative framework for American disaster
offer wind mitigation credits, thereby encouraging management through its system of presidential
individuals to invest in building features that reduce disaster declarations, also limits resilience
damage due to wind. Policy makers and insurers could investments.28 While the act references mitigation
develop similar programs to address different hazards, measures as they relate to reducing losses from
and SLTT agencies could partner with corporations disasters, it primarily focuses on reimbursements for
and nonprofits to provide more information about how response activities.
homeowners and small businesses can improve their
mitigation and preparedness efforts—in addition to To determine the appropriate mix of investment
why it matters. across mitigation, prevention, preparedness,

27
Natural hazard mitigation saves: 2019 report, National Institute of Building Sciences, December 2019.
28
Title 42, Chapter 68: Disaster Relief, Section 5121, US Code, accessed July 8, 2022.

Building resilience: The history and future of US crisis management 7


response, and recovery, disaster managers could have less access to response resources. Limited
consider new frameworks and approaches— resources, in turn, can inhibit long-term recovery.
especially in the mitigation space—for determining Indeed, on average, people living in communities of
the effectiveness of investments across crisis color experience a 31-point decline in their credit
management investment portfolios. FEMA’s scores following disaster events, compared
National Mitigation Investment Strategy represents with a decline of four points among residents in
forward progress, but more could be done to make predominantly White communities, based on data
the assessment of disaster management from 15 natural disasters between 2011 and 2014.31
investments both more quantitatively rigorous and In addition, Black and Latino households that
easier to communicate to policy makers.29 experience natural disasters lose $27,000 to
$29,000, on average, while White households gain
Looking ahead, crisis management practitioners $126,000, based on wealth data from 3,500 families
could think more creatively about developing new between 1999 and 2013.32
and better ways to quantify and communicate the
value of crisis management investments. Resilience The current administration has prioritized equity in
return on investment (RROI), which was recently its policy making. In 2021, FEMA announced a new
championed by Resilience Shift,30 a partnership definition of equity—“[t]he consistent and
between Lloyd’s Register and the Arup Group, is a systematic fair, just and impartial treatment of all
promising metric. Calculation of expected RROI for individuals”—and launched a portfolio of new equity
various crisis management activities could be a initiatives (including expanding assistance for
powerful tool for clarifying trade-offs and helping housing and disaster-caused disability).33 Going
prioritize disaster management investments. This forward, equity can be interwoven in every aspect of
approach could help with not only immediate crisis management, and the crisis management
budgetary considerations but also the development community can identify the causes of inequity and
of more widely applicable best practices that could work diligently to eliminate them.
be syndicated and replicated by public-sector
agencies around the country at the federal, state, The causes of inequity in crisis management are
and local levels. While it might be difficult to multifarious but include postdisaster documentation
calculate expected RROI on mitigation and requirements, postdisaster replacement policies,
preparedness, even tentative or rough expected and manual processes required at the local level to
RROIs could be useful to policy makers. And broad secure funds. In recovery, for instance, an obstacle
use of an RROI methodology for assessing disaster for disadvantaged communities can be the
management investments might prompt requirement for verification (such as titles to houses)
stakeholders to collect data that will help to refine to receive relief aid, as detailed by FEMA in 2021.
and improve RROI calculations over time. FEMA has recently acted to accept a wider range of
verification documents to ensure equity.34 But in
Question 5: How could equitable recovery light of this barrier, policy makers could also
be factored into conversations about crisis consider additional ways of modifying verification
management? requirements in other contexts so that recovery
Communities of color are disproportionately funds and assistance are allocated more equitably.
affected by natural disasters in part because they

29
National mitigation investment strategy, US Department of Homeland Security Mitigation Framework Leadership Group, August 2019.
30
Peter J. Hall et al., Resilience return on investment (RROI): Agenda setting scoping studies summary report, Resilience Shift, June 30, 2017.
31
C aroline Ratcliffe et al., Insult to injury: Natural disasters and residents’ financial health, Urban Institute Opportunity and Ownership Initiative,
April 2019.
32
“Natural disasters widen racial wealth gap,” ScienceDaily, August 20, 2018.
33
“FEMA defines equity in its mission of making programs more accessible,” Federal Emergency Management Agency (FEMA), September 9,
2021.
34
“DHS announces changes to individual assistance policies to advance equity for disaster survivors,” US Department of Homeland Security,
September 2, 2021.

8 Building resilience: The history and future of US crisis management


The structure of recovery aid is another source of Agriculture’s Disaster Supplemental Nutrition
inequitable outcomes. Typically, recovery aid Assistance Program.36 Navigating the different
supports replacement costs for damaged or lost requirements of each of these programs can be
property, but the inspectors sent to verify damage challenging—especially as people juggle the effects
may not be able confirm that damage was caused by of the disaster. The crisis management community
the disaster. For example, if a roof that was could simplify the process for receiving funds from
damaged in a disaster was due to be replaced, this web of programs and, in particular, help low-
inspectors may cite lack of maintenance as the income and historically disadvantaged communities
cause of damage, and the applicant may not receive access the funds they are entitled to.
help in replacing the roof.35 Policy makers could take
these factors into account when designing recovery
aid funding formulas in order to achieve more
equitable outcomes across communities. The crisis management community has made a great
deal of progress since the implementation of the
Finally, funding distribution still relies heavily on Homeland Security Act. However, the work of crisis
affected individuals to take action. A large number management never ends, and there will be many
of funds may become available to individuals more challenges in the coming years.
affected by presidential-declared disasters,
including FEMA’s Transitional Shelter Assistance The questions posed above could help the crisis
and Low Income Home Energy Assistance Program management community approach the future in a
contingency funds; SBA’s Disaster Loan Assistance more integrated and coherent way—and build on the
and Community Development Block Grant Disaster foundation established in the years since 9/11 to
Recovery funds; the Department of Labor’s Disaster create more secure, equitable, and resilient
Unemployment Assistance; and the Department of communities across the United States.

Tony D’Emidio and Jon Spaner are partners in McKinsey’s Washington, DC, office, where Zoe Fox is a consultant;
Ophelia Usher is an associate partner in the Stamford office.

The authors wish to thank Florinda Bartoli and Charles Drummond for their contributions to this article.

Copyright © 2022 McKinsey & Company. All rights reserved.

35
 ebecca Hersher and Ryan Kellman, “Why FEMA aid is unavailable to many who need it the most,” NPR, June 29, 2021.
R
36
Insult to injury, April 2019.

Building resilience: The history and future of US crisis management 9

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