Disaster Recovery and the Private Sector: New Roles and New Challenges

KatrinaFlooding“From 2000 to 2014, the number of U.S. disaster declarations has increased dramatically – 65 major declarations per year on average and a total of 1,907 declarations overall. And during the peak of such increases in 2011, the Federal Emergency Management Agency (FEMA) issued the largest number to date (90 major disaster declarations and 242 disaster declarations overall).” This quote from a new RAND Perspective sets the stage for a discussion on the changing nature of disasters, and the changing role of the private sector in disaster recovery. The report, titled “What Role Does the Private Sector Have in Supporting Disaster Recovery, and What Challenges Does It Face in Doing So?”, provides an examination of how the role of the private sector has shifted, given the shifting nature of disasters both in frequency and nature. As disaster declarations now include those that are natural, human-caused, and technological, the question at the helm of the disaster recovery conversation is “who pays for this?”.

The expanding role of the private sector in the face of increased disasters can be credited to a couple of factors: the private sector provides access to more than just a single source of funding, and the private sector, generally speaking, is also able to disperse funding more flexibly and efficiently than the public sector or government. The authors pose three main questions then to guide the research: “(1) How is the private sector contributing in supporting disaster recovery financing? (2) What challenges does it face in doing so? (3) What are potential opportunities for future involvement?” According to the authors, information gaps and financing processes pose the greatest challenges, and even obstruct the research noted here. “Tracking private-sector investment is also particularly challenging, both for research and simply to have companies able to monitor where their dollars go. It is very difficult to piece together the total dollars that private-sector entities provide.”

As this role continues to evolve and expand, the authors identify three areas of further research that is needed to clarify and enhance the framework of involvement for the private sector. First, more research, especially at the systematic level, is needed to ascertain “the full extent of private-sector contributions in disaster recovery.” Second, research should be specifically directed at determining if there is an ideal time for private-sector funds to be distributed in the disaster timeline, and how those funds are coordinated. Third, more research is needed for those private sector engagements in which companies invest in disaster preparedness and creating resilience, and how this support is implemented. Regardless of the empirical challenges posed by the lack of delineated data, the support the private sector provides, both through public-private partnerships and private-community partnerships, is an indispensable component of disaster recovery.