We need to recognize that the decision to allow pre-code buildings to stay unretrofitted against local hazards means that the portion of our population that live and work in those buildings face higher than average risks than the populations that are in the newer buildings. [We] need to work to change the dynamic that the areas of town that are most affordable are also the areas facing greater hydrological, geological and ecological risks.
” Citizen from King County, Washington, 2011

2


The Foundation for Building a Resilient Nation: Understanding, Managing, and Reducing Disaster Risks

Understanding, managing, and reducing disaster risks provide a foundation for building resilience to disasters. Risk represents the potential for hazards to cause adverse effects on our lives; health; economic well-being; social, environmental, and cultural assets; infrastructure; and the services expected from institutions and the environment (Figure 2.1). The perceptions of and choices made about risk shape how individuals, groups, and public- and private-sector organizations behave, how they respond during and after a disaster event, and how they plan for future disasters. Most people have some sense of what risk means to them. However, when pressed to identify or assess disaster risk, or determine how to select among available options for managing it, “risk” becomes more difficult to articulate.

This chapter focuses on the importance of understanding risk and risk management as essential steps toward increasing resilience to hazards and disasters. This chapter examines how hazards are identified and how disaster risks are assessed and perceived. Based on this understanding, the chapter summarizes a range of options to mitigate and manage risk. Some of the characteristics of individual and collective decision-making processes—what we know and how we know it—are also described, as are challenges and opportunities that decision makers face in managing risk. Challenges in managing risk due, for example, to inadequate data, to misperceptions of or biases in risk information, to insufficient commitment to use risk management tools, or to lack of communication among stakeholders are also identified. The chapter concludes with several key themes that serve as a foundation for managing risk and increasing disaster resilience for a community, a business, a state, or the nation. Although the chapter directs its discussion of risk and risk management toward general situations using evidence from the published literature, the committee recognizes the importance of the actual practice of risk management. The chapter therefore also draws upon examples from the field



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"We need to recognize that the decision to allow pre- code buildings to stay unretrofitted against local hazards means that the portion of our population that live and work in those buildings face higher than average risks than the populations that are in the newer buildings. [We] need to work to change the dynamic that the areas of town that are most affordable are also the areas facing greater hydrological, geological and ecological risks." Citizen from King County, Washington, 2011 2 The Foundation for Building a Resilient Nation: Understanding, Managing, and Reducing Disaster Risks Understanding, managing, and reducing disaster risks provide a foundation for building resilience to disasters. Risk represents the potential for hazards to cause adverse effects on our lives; health; economic well-being; social, environmental, and cultural assets; infrastructure; and the services expected from institutions and the environment (Figure 2.1). The perceptions of and choices made about risk shape how individuals, groups, and public- and private-sector organizations behave, how they respond during and after a disaster event, and how they plan for future disasters. Most people have some sense of what risk means to them. However, when pressed to identify or assess disaster risk, or determine how to select among available options for managing it, "risk" becomes more difficult to articulate. This chapter focuses on the importance of understanding risk and risk management as essential steps toward increasing resilience to hazards and disasters. This chapter examines how hazards are identified and how disaster risks are assessed and perceived. Based on this understanding, the chapter summarizes a range of options to mitigate and manage risk. Some of the characteristics of individual and collective decision-making processes--what we know and how we know it--are also described, as are challenges and opportunities that decision makers face in managing risk. Challenges in managing risk due, for example, to inadequate data, to misperceptions of or biases in risk information, to insufficient commitment to use risk management tools, or to lack of communication among stakeholders are also identified. The chapter concludes with several key themes that serve as a foundation for managing risk and increasing disaster resilience for a community, a business, a state, or the nation. Although the chapter directs its discussion of risk and risk management toward general situations using evidence from the published literature, the committee recognizes the importance of the actual practice of risk management. The chapter therefore also draws upon examples from the field 25

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26 DISASTER RESILIENCE: A NATIONAL IMPERATIVE and from the standpoint of key decision makers and organizations concerned with addressing disaster risk and increasing resilience. FIGURE 2.1 Floodwaters rise through downtown Cedar Rapids, June 2008, when the Cedar River finally crested at 31.12 feet, more than 19 feet above the flood stage. Source: AP photo/Jeff Robertson. UNDERSTANDING RISK Disaster risk comprises four elements: hazard, exposure, vulnerability, and consequence (International Bank for Reconstruction and Development/World Bank, 2010) (Box 2.1). Hazard refers to the likelihood and characteristics of the occurrence of a natural process or phenomenon that can produce damaging impacts (e.g., severe ground shaking, wind speeds, or flood inundation depths) on a community.1 Exposure refers to the community's assets (people, property, and infrastructure) subject to the hazard's damaging impacts. Exposure is calculated from data about the value, location, and physical dimensions of an asset; construction type, quality, and age of specific structures; spatial distribution of those occupying the structures; and characteristics of the natural environment such as wetlands, ecosystems, flora, and fauna that could either mitigate effects from or be impacted by the hazard. 1 The term "community" throughout the report is used very broadly to incorporate the full range of scales of community organization--from the scale of a neighborhood to that of a city, county, state, multistate region, or the entire nation. Where a specific kind of community is intended, the chapter adds the appropriate descriptor.

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THE FOUNDATION FOR BUILDING A RESILIENT NATION 27 Vulnerability is the potential for harm to the community and relates to physical assets (building design and strength), social capital (community structure, trust, and family networks), and political access (ability to get government help and affect policies and decisions). Vulnerability also refers to how sensitive a population may be to a hazard or to disruptions caused by the hazard. The sensitivity can affect the ability of these populations to be resilient to disasters (NRC, 2006b; Cutter et al., 2003, 2008). Vulnerability is projected by the presence and effectiveness of measures taken to avoid or reduce the impact of the hazard through physical or structural methods (e.g., levees, floodwalls, or disaster-resistant construction) and through nonstructural actions (e.g., relocation, temporary evacuation, land-use zoning, building codes, insurance, forecasts, and early warning systems), or construction-related and nonconstruction-related methods.2 BOX 2.1 What Is Disaster Risk? For the purpose of the report, we have adopted a broad definition of risk. The definition presented in this chapter draws common elements from among a range of existing definitions and the communities that provide them. Most definitions take into account elements of hazard (what could happen to trigger damage), exposure (what is at stake), vulnerability (the level of sensitivity to a hazard), and consequences (the impact or damage caused by the hazard). We refer to disaster risk as the potential for adverse effects from the occurrence of a particular hazardous event, which is derived from the combination of physical hazards, the exposure, and vulnerabilities (Peduzzi et al., 2009; IPCC, 2012). Similarly, we use the term disaster risk management (or simply risk management) to include the suite of social processes engaged in the design, implementation, and evaluation of strategies to improve understanding, foster disaster risk reduction, and promote improvements in preparedness, response, and recovery efforts (IPCC, 2012). Consequences are the result of the hazard event impacting the exposure in a region or community, taking into account the degree of the community's vulnerability. Consequences can be immediate (e.g., the loss of human lives, injuries, damaged buildings, businesses), or long term (e.g., environmental 2 The terms structural and nonstructural as they are applied in this report reflect the use of these terms in the flood, hurricane, tsunami, and to a lesser degree, the earthquake arena. Within the emergency management community, the terms are used interchangeably to describe certain mitigation measures. Although the report is consistent in its use of these terms and not outside the norm, nonstructural mitigation has a very specific meaning in engineering circles (it only refers to contents and other building elements not related to structural strength). For the purposes of this report, the committee uses the terms "structural" and "construction-related" and their opposites interchangeably.

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28 DISASTER RESILIENCE: A NATIONAL IMPERATIVE damage or physical and mental health impacts), and influence the overall well- being and quality of life for the community (Heinz Center, 2000). Consequences may also extend far beyond the area immediately affected by the hazard-- cascading impacts on a supply chain, for example, may have a national or global effect. Lastly, consequences may be mitigated by such measures as insurance, continuity, and recovery plans by businesses and governments, and actions by the state and community such as well-enforced building codes and land-use planning. These measures, put into place either individually or in concert with one another, can greatly reduce the potential losses and facilitate a much speedier recovery from future disaster events, thereby contributing to increasing resilience. MANAGING RISK Risk management is a process that examines and weighs policies, plans, and actions for reducing the impact of a hazard or hazards on people, property, and the environment. Ideally, risk is managed in the most effective and equitable way subject to available resources and technical capabilities. Under the best circumstances, risk management includes risk reduction strategies that draw upon scientific, engineering, social, economic, and political expertise. An important aspect of risk management is providing realistic expectations as to what can be accomplished using specific strategies and the relative costs and benefits of undertaking proposed measures (see also Chapter 3). Managing expectations is also important because disaster risks cannot be eliminated completely even with the most appropriate and successful risk management strategies. Importantly also, some tools or actions that can reduce short-term risk may increase long-term risk, requiring careful evaluation of the risk management strategies employed. Although some residual risk will always require attention, risk management can help build capacity to become more resilient to disasters, particularly when everyone in a community is engaged in managing risk (Box 2.2; see also Chapter 5). The Risk Management Process Risk management is a continuous process that begins with establishing goals, values, and objectives of the affected and interested parties in the public and private sectors as well as citizen groups and nongovernmental organizations (NGOs) (Keeney, 1992; Sayers et al., 2012) (Figure 2.2). For an affected community, the basis for goal setting begins with questions such as: What risks are we facing? What risks are we willing to tolerate? What risks are not acceptable under any circumstances?

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THE FOUNDATION FOR BUILDING A RESILIENT NATION 29 BOX 2.2 Role of Emergency Managers in Risk Management and Disaster Resilience Although progressive emergency managers anticipate future disasters and take preventive and preparatory measures to build disaster-resistant and disaster-resilient communities, many people are of the opinion that the general field of emergency management does not yet give enough attention to prevention and mitigation activities. Traditionally, emergency managers have confined their activities to developing emergency response plans and coordinating the initial response to disasters. In the future, emergency managers may need to become more strategic in their thinking about disasters in order to help communities respond to the risks they face. The role of the emergency manager necessitates a high degree of technical competence, but is increasingly evolving to include the roles of a manager and a policy advisor who oversee community-wide programs to address risk in all phases of the emergency management cycle. This cycle envelops the characteristics of resilience--to assist communities in preparing and planning for, absorbing, recovering from, and successfully adapting to adverse events. As key actors in risk management and increasing resilience in communities, emergency managers are required to understand how to assess hazards and reduce vulnerability, and to seek the support of public officials and the enforcement of ordinances that reduce vulnerability. The goals and objectives of the community reflect the values of the key interested parties, current laws, public-sector institutional arrangements at the local, state and federal levels, and existing programs and policies (e.g., the National Flood Insurance Program [NFIP], the California Earthquake Authority, or homeowners insurance offered by the private sector). Once goals, values, and objectives are established by the nation, state, and/or a community, the next step in the disaster risk management process is to identify the hazards (e.g., earthquakes, floods, hurricanes, tornadoes, droughts, ice storms and blizzards, wildfires, landslides, volcanic eruptions, infectious diseases, terrorism, biohazards) and determine whether exposure to them can cause adverse impacts to property, people, and the environment. Assessing risk, the next step in the process, is an assessment of the potential impacts associated with these hazards. Risk assessment provides estimates of potential losses to lives and property and some estimate of annual likelihood of occurrence. Sensitivity analysis--part of risk assessment--estimates the efficacy of specific programs and policies in reducing or managing the risk associated with the hazard. Risk management strategies and decisions specify the types of information collected by different interested parties in the community and how these data are perceived and used in formulating strategies and programs for managing risk. One of the key factors in risk strategy implementation is determining which risks are acceptable or tolerable and which ones are not;

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30 DISASTER RESILIENCE: A NATIONAL IMPERATIVE those that are not tolerable thus require management or mitigation (NRC, 2010). The potential consequences of hazards, including losses or disruptions, coupled with the perceptions of risks and consequences play into which risk strategies are used and how they are implemented. FIGURE 2.2 Continuous and reinforcing process of disaster risk management as a foundation for building resilient communities. Central to the risk management process is the collective evaluation by the community members--including individuals, emergency managers, governing officials, the private sector, and NGOs--of community goals, values, and objectives for the risk management strategy and for community resilience. The entire process, divided for convenience of discussion into six steps, encompasses the ability to identify and assess the local hazards and risks (steps 1 and 2), to make decisions as to which strategies or plans are most effective to address those hazards and risks and implement them (steps 3 and 4), and to review and evaluate the risk management plan and relevant risk policies (steps 5 and 6). The continuity of the process allows a community effectively to "enter" risk management at any point in the "cycle," though identification of basic hazards and assessment of risks is of primary importance. The last two steps in the disaster risk management process are to continuously review and evaluate risk strategies and to adjust or develop risk management policies. Although often overlooked, these steps are important, particularly as new opportunities arise, as policies are enacted, or as community goals shift. In designing and evaluating strategies for risk management, new information or data are also important to take into account. Such information may include, for example, knowledge of increased building development in known hazard areas that could increase the exposure to the hazard; the potential impacts of climate change that could affect the intensity or frequency of the hazard; and new and more accurate measurements of key parameters such as

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THE FOUNDATION FOR BUILDING A RESILIENT NATION 31 precipitation, geological activity along faults, or coastal erosion that influence the way in which a hazard is understood and addressed. Recent disasters in the community or elsewhere can provide lessons and new points of useful information. By recognizing and reviewing risk strategies and available (and sometimes new) data on hazards and their impacts, adjustments can be made to overcome deficiencies and improve the existing set of policies, institutional arrangements, and strategies to develop new ones, allowing the risk management cycle to begin again. Emergency managers use risk management principles described in this cycle to establish priorities for the communities within their jurisdiction (Box 2.3). BOX 2.3 Emergency Managers as Risk Management Practitioners The following is extracted from the document "Principles of Emergency Management" (IAEM, 2007) and identifies some of the principles of emergency management that relate to the role of emergency managers as practitioners of risk management: Emergency managers generally employ risk management principles such as hazard identification and risk analysis to identify priorities, allocate resources and use resources effectively. . . . Setting policy and programmatic priorities is therefore based upon measured levels of risk to lives, property, and the environment. The National Fire Protection Association (NFPA) 1600 states that emergency management programs should identify and monitor hazards, the likelihood of their occurrence, and the vulnerability to those hazards of people, property, the environment, and the emergency program itself. The Emergency Management Accreditation Program (EMAP) Standard echoes this requirement for public sector emergency management programs. . . . Emergency managers are seldom in a position to direct the activities of the many agencies and organizations involved in emergency management. In most cases, the people in charge of these organizations are senior to the emergency manager, have direct line authority from the senior official, or are autonomous. Each stakeholder brings to the planning process their own authorities, legal mandates, culture and operating missions. The principle of coordination requires that the emergency manager, or other actors responsible for risk management and increasing resilience, gain agreement among these disparate agencies as to a common purpose, and then ensure that their independent activities help to achieve this common purpose. Note: Information on NFPA 1600 is available at http://www.nfpa.org/newsReleaseDetails.asp?categoryid=488&itemId=46745&cookie%5Ftest=1; EMAP information is available at http://www.emaponline.org/.

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32 DISASTER RESILIENCE: A NATIONAL IMPERATIVE Foundation for Risk Management Two elements provide the foundation for managing risks: identifying the hazards that affect the community and assessing the risks that such hazards pose (see Figure 2.2). Both are based on scientific information. Because these two steps provide the cornerstone for risk management, we provide more detail on the current methods for hazard identification and disaster risk assessment. Hazard Identification As noted earlier, hazard identification determines the types and characteristics of potential disasters facing a community or region (Box 2.4). For example, earthquake hazard is a combination of the likelihood of earthquake occurrence (location, magnitude, and recurrence rate of all future damaging earthquakes impacting a region) and ground motion predictions that are used to calculate the spatial distribution of shaking intensity for these future events. In a similar way, a hurricane hazard can be described by the spatial distribution of its projected path and wind speed and central pressure along that path. Assessing the likelihood of earthquake- and weather-related events typically is based on analysis of - both the historical and geological record of events, knowledge of the physical processes leading to the occurrence of a disaster, and real-time data collection and monitoring of natural (geological, atmospheric, oceanic) phenomena. Although historical records are important, limits exist on the extent to which generalizations can be made about how physical phenomena will evolve in the future. For example, expected changes in climate bring into question how to interpret historical data in characterizing the intensity and magnitude of future hurricanes and floods (Milly et al., 2008), and may increase the costs and losses associated with severe storms and extreme events in the years to come (Karl et al., 2009; NRC, 2011a; IPCC 2012). BOX 2.4 Cedar Rapids, Iowa: Hazard Identification In May and early June 2008, tornadoes and floods struck Iowa. The largest single tornado in the state in a 30-year period, an EF-5,a struck the town of Parkersburg, Iowa, 85 miles northwest of Cedar Rapids on May 25 and caused millions of dollars in damage, eight deaths, and the mobilization of significant state and local emergency response resources. In early June, as the effects of the tornadoes were still being evaluated and absorbed, the residents and decision makers of Cedar Rapids were monitoring information about the potential for major flooding of the Cedar River which passes through the city center. The water levels in the Cedar and nearby Iowa Rivers and their tributaries had risen throughout the spring because the agricultural land that covers 74 percent of the state, still saturated from the

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THE FOUNDATION FOR BUILDING A RESILIENT NATION 33 heavy winter snowmelt and without crop cover, together with an extensive network of subsurface clay drainage tile systems, contributed extensive runoff into the rivers. The high river levels were exacerbated by heavier-than-average precipitation during the spring (Bradley, 2010; Krajewski and Mantilla, 2010). Having endured record floods in 1993 when the Cedar River crested in Cedar Rapids at 22.5 feet (the river's flood stage is 12 feet), most citizens, officials, emergency personnel, businesses, and museums held some expectation that they would not risk another "100-year flood" in 2008. When the Cedar River eventually crested (see Figure 2.1) at more than 31 feet, it was well above what would characterize a "500-year" flood event.b Hazard identification is more than just historical experience with hazard events; it includes the identification of potential sources of disaster to the community and the likelihood and expected impacts of future events. Cedar Rapids has multiple sources of natural hazards: floods, severe weather (thunderstorms and hail; severe winter weather), tornadoes and severe wind storms, and heat waves. Cedar Rapids (Linn County) is also located 9 miles downstream from the Duane Arnold Energy Center, a commercial nuclear power facility, and is within the emergency planning zone for that facility, adding a direct human-made hazard to the area. The city and county have a risk mitigation strategy in place for the nuclear power facility: the city's emergency planners, hospital personnel, and citizens drill four times a year along established evacuation routes. These drills, including the relocation of essential medical facilities and personnel proved essential during the response to the flooding of the Cedar River into the city in the second week of June 2008. According to the health personnel and emergency responders with whom the committee spoke in their visit to Cedar Rapids, the preparation and planning involved in preparing for that single, human-induced hazard played a large role in the fact that no lives were lost to a different hazard that evolved into a disaster during the flooding in 2008. a "EF" equates to the Enhanced Fujita scale, which is a tornado rating based on estimated wind speeds and damage. The scale ranges from EF-0 to EF-5. At EF-5, wind speeds are estimated to exceed 200 mph for 3-second gusts (http://www.crh.noaa.gov/arx/efscale.php). b The 100-year floodplain is the boundary of the flood that has a 1 percent chance of being equaled or exceeded in any given year; the 500-year floodplain has a 0.2 percent chance of being equaled or exceeded in any given year. Sources: Panelists in the committee's field trip and workshop in Cedar Rapids and Iowa City (see Appendix B for list of panelists); www.linncounty-ema.org; http://www.crh.noaa.gov/Image/dmx/Iowa%20Tornado%20Statistics%201980-2008%20Graph.pdf. Data and characterization of weather-related events and other natural hazards such as earthquakes, floods, or wildfires are made by federal agencies such as the U.S. Geological Survey (USGS), National Oceanic and Atmospheric Administration (NOAA), Federal Emergency Management Agency (FEMA), U.S. Army Corps of Engineers (USACE), National Aeronautics and Space Administration (NASA), and U.S. Forest Service, each of which has

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34 DISASTER RESILIENCE: A NATIONAL IMPERATIVE responsibility for collecting data and monitoring these phenomena (see Chapter 6 for more detailed description of these federal roles and Appendix C for some of the kinds of data that these agencies collect and monitoring that they conduct). Much of this information is provided to communities in data tables or in the form of maps. One example of a quantitative hazard assessment for a specific hazard is well illustrated by the USGS National Seismic Hazard Mapping Project, recognized both nationally and internationally as the authoritative analysis of earthquake hazard in the United States. The USGS process includes solicitation of input parameters from regional experts, a logic-tree approach to capture the range of scientific uncertainty in input parameters, transparency regarding all input data and methodology, and online accessibility to a wide array of digital hazard maps and derivative products.3 One of the major strengths of the USGS Seismic Hazard Maps is that they are probabilistic; that is, they provide estimates of ground-shaking levels at different return periods for the full array of potential future earthquakes and take into account each earthquake's rate of occurrence. Many communities address their potential hazards in a qualitative way, such as by defining high-, moderate-, and low-hazard zones, or through scenarios of likely or worst-case events, but only a probabilistic hazard assessment quantitatively captures potential events and their impacts together with their likelihood of occurrence. Probabilistic hazard assessment draws from historical data but also from longer-term records of past events from the geological record. The USGS's probabilistic hazard is used to develop outputs of earthquake ground motion for designing buildings and structures that accord, for example, with the 2012 International Building Code.4 For example, most building codes in the United States are based on the USGS's estimate of the ground motion level with a 10% probability of exceedance in 50 years. This corresponds to ground motions with a 475-year return period, or the highest shaking level expected from any nearby earthquake source that is likely to occur over the next 475 years.5 Probabilistic hazard is also the input used in risk assessment to compute probable losses at different return periods and is thus used to determine insurance premiums for relatively low likelihood but high- impact events. The largest federal hazard mapping program is NFIP's flood insurance rate maps, produced for the community level. These maps identify areas subject to flooding from events of varying intensity based on elevation, channel morphology and streamflow, and watershed conditions. Elevation data are based on topographic features using digital elevation models. The flood risk information is based on hydrological and hydraulic analyses, historical data, and 3 See http://earthquake.usgs.gov/hazards/. 4 https://geohazards.usgs.gov/secure/designmaps/us/. 5 See USGS FAQs: http://earthquake.usgs.gov/learn/faq/?faqID=223.

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THE FOUNDATION FOR BUILDING A RESILIENT NATION 35 watershed characteristics as they affect runoff. Although the flood mapping process and inputs are well known, actually making accurate flood maps and maintaining the information are complex (NRC, 2009). Limitations in our understanding of floodplain boundaries, needed improvements in predictive and probabilistic flood models (riverine and storm surge), and enhanced topographic accuracy (NRC, 2007a, 2009) render the timely production of flood maps a costly but essential proposition for communities and the federal government (Box 2.5). BOX 2.5 A College Campus Benefits from Flood Maps After Hurricane Irene (2011) The Russell Sage College Campus in Troy, New York, sits within two blocks of the Hudson River, north of Albany. On August 28, Hurricane Irene had passed through the area. Although Monday, August 29 was clear and sunny, the Hudson River was rising. The disaster management team at the college used FEMA flood maps to estimate the risk of campus flooding, which would necessitate the evacuation of all personnel and students who had just arrived to begin the fall semester. Although the start of the academic year had to be delayed, the river stopped rising just below the level at which the campus would have flooded. Only the basements of two low-lying buildings were affected. The flood maps were essential in preventing an unnecessary evacuation. In some states, the federal and state agencies work together to develop authoritative zoning maps to identify areas subject to multiple levels of hazards for a variety of perils such as landslides, liquefaction, and surface fault rupture. Also, new technologies are making possible increasingly higher resolution and more sophisticated and detailed hazard identification maps such as the characterization and monitoring of wildfire activity (Figure 2.3).

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Risk mapping FEMA, USACE, Weeks to several Communication of the hazard Overreliance on accuracy NOAA, NASA, years depending upon risk to the community of maps USFS, USGS in quality and conjunction with availability of data state and local and map area covered authorities; engineering firms Zoning Local and state Immediate Prohibits building or rebuilding May prevent lucrative ordinances governments in hazard-prone locations construction of homes or businesses in specific areas Hazard and Private sector; Immediate if adopted Allows buyers to identify May hinder sales or lower vulnerability federal, state, and freely by the private potential hazards or property values in areas disclosure local governments sector; several years construction known to be where hazards are or more if new vulnerable to such hazards revealed or for vulnerable legislation is required before the purchase of a home construction types to implement or business; increases the value of disaster-resistant buildings Economic and Federal, state, and May be quickly Subsidies, grants, fines, or tax Negative incentives tax incentives local governments adopted and rebates can provide incentives (fines, penalties) may not implemented if to homeowners and businesses be acceptable to residents political will, to install hazard mitigation or businesses; positive competing demands measures incentives (subsidies, for resources, and grants, rebates) incur public acceptance immediate costs to the align; realization of government with delayed returns on investment return on investment

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may be months to many years Hazard NOAA, USGS, Constant data Allows forecasts of potential Complex disasters and forecasting USACE, NASA, collection and events and their impacts to be natural systems, and warning USFS, state monitoring made; when communicated in a increasing population, and systems agencies, private timely way, warning systems potential longer-term sector can save lives impacts require increased data precision and better forecasting models Insurance FEMA, state Policies currently are Risk-based pricing that Continued public insurance issued on an annual communicates level of risk to financial assistance to commissioners, basis but some people in hazard-prone areas; those who do not buy private insurance consideration is being vouchers for lower-income insurance industry, banks given to multiyear owners insurance tied to the property Catastrophe Insurers, banks, Typically 1 to 3 years Risk is transferred to a broad Investors lose invested bonds investors investor base in the event of a funds if a catastrophic catastrophic event; allows event occurs; insurers pay access to large fund amounts bond amount with interest fairly quickly if the event does not occur Note: FEMA = Federal Emergency Management Agency, NASA = National Aeronautics and Space Administration, NIST = National Institute of Standards and Technology, NOAA = National Oceanic and Atmospheric Administration, USACE = U.S. Army Corps of Engineers, USFS = U.S. Forest Service, and USGS = U.S. Geological Survey.

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58 DISASTER RESILIENCE: A NATIONAL IMPERATIVE IMPROVING RESILIENCE THROUGH RISK MANAGEMENT Several themes emerge from disaster risk management, which provide a foundation for increasing the resilience of communities to hazard and disaster risks (Sayers et al., 2012): 1. Risk cannot be eliminated completely, so some residual risk will continue to exist and require management actions. The impacts of past natural disasters, particularly recent ones, are not necessarily a key to the future for several reasons. Society and its support systems have become increasingly interdependent (Chapter 1). In addition, human activity and development have destroyed much of nature's defenses against natural hazards. This fact, coupled with likely changes in the physical environment due to climate change, suggests that future hazard probability and exposure will rise if no actions are taken. Historic records are short in a geological time frame, and the possibility exists for more severe floods, earthquakes, or other disasters. 2. The nature of risk perceptions and behavioral biases are important to consider in developing risk management strategies. The public and decision makers often underestimate the likelihood of a disaster occurring and hence do not undertake risk-reducing measures beforehand. Short-term strategies may also dominate when deciding what action to take. These behavioral features need to be considered when determining what types of risk management strategies are likely to increase resilience to disasters. 3. A diverse portfolio of disaster risk management measures provides options for decision makers and communities before, during, and after disasters. Such a portfolio can aid in efficient use of resources and more effective risk management. A portfolio with diverse risk management measures provides multiple options for enhancing resilience to a community in case one of the measures should fail. Combining well-enforced building codes and insurance with structural reinforcements or other measures can take on special significance to protect the community or region against physical and financial losses should structural measures (e.g., dams and levees, natural defenses) fail to provide full protection against the hazard. A key balance is that between investment in resources for managing disaster and the likelihood and magnitude of the hazards. 4. The need for science-based objective hazard identification and risk assessments is a critical input into the risk management process. Such input should be easily communicated to the community, with information and data that are transparent and not cloaked in an unpublished model, with all details proprietary. The sole reliance on anecdotal information, past experience, or deterministic scenarios does not provide an adequate or rigorous foundation for determining disaster risk.

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THE FOUNDATION FOR BUILDING A RESILIENT NATION 59 5. Reflecting risk in insurance premiums while keeping insurance acquisition affordable to those requiring special treatment can encourage more individuals to purchase insurance policies. When insurance premiums are based on risk they provide signals about the hazards individuals face and can encourage them to adopt cost-effective mitigation measures to decrease their vulnerability to future disaster losses. General public funding, as opposed to insurance premium subsidies, can provide insurance for homeowners currently residing in hazard-prone areas and who may be socially vulnerable but are uninsured or inadequately insured. 6. Communicating risk in ways that are understandable to the public is a critical aspect of the risk management process. Decision makers and the public require accurate information on the risks they face. Risk maps, framing of information, social networking, and educational processes can be employed to communicate information on the risk and on mitigation measures (Sayers et al., 2012; this topic is addressed in detail in Chapter 5). KNOWLEDGE AND DATA NEEDS To achieve resilience the federal government has a dominant leadership role in supporting research to improve forecasting, impact-modeling capabilities, as well as the efficacy of risk-reduction strategies for the physical, public health, ecological, and socioeconomic aspects of natural and human-made disasters. Over the last several decades, significant investment by federal and state agencies in both land-based and space-based monitoring and observation networks for natural hazards has greatly increased our ability to forecast the likelihood and characteristics (e.g., magnitude, path) of future event occurrence as well as the intensity of the physical impacts of natural hazard events (e.g., ground-shaking level, wind speed, inundation depth). These data networks provide a quantitative basis for accurate, real-time meteorological forecasting, as well as early warning of flooding and tsunamis. In addition, these hazard monitoring networks provide a multidecadal baseline to help evaluate natural variability as well as the impacts of climate change. The digital technological revolution made hazard monitoring network data available in real time and, in some cases, permitted rapid computer- automated, preliminary data analysis. The nation relies on a number of essential land-based and space-based hazard monitoring networks for short-term forecasting and early warning, as well as for understanding the physical processes leading to natural disasters and their physical impacts. Both the sensors and the communication networks supporting them require continual maintenance as well as upgrades to take full advantage of technological advances in sensor capabilities and communications. However, resource limitations have prevented many federally run monitoring networks from taking full advantage of the technological advances. The key federal hazard monitoring

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60 DISASTER RESILIENCE: A NATIONAL IMPERATIVE networks (along with the relevant reviews which include recommendations) are illustrated in Appendix C. Nearly all these networks have been the subject of outside reviews with consistent recommendations for upgrades. While it is beyond the scope of this report to repeat all the recommendations related to hazard monitoring in each of the NRC reports listed in Appendix C, we extend our strongest support for continued and adequate upgrading, expansion of coverage, maintenance, and staffing of the key hazard monitoring networks and observation platforms as outlined above. These data are essential for sustaining the forecasting and modeling capabilities required for national resilience. Achieving resilience involves monitoring impacts in all the systems and the integration of data. While many hazard monitoring networks are in place, comparable networks for monitoring changes in the human systems as they affect vulnerability and resilience are lacking. Monitoring vulnerability and resilience requires long-term systematic data collection to capture for place- based human and environmental changes. A number of studies have advocated establishing place-based observatory networks on community resilience and vulnerability (Peacock et al., 2008; NRC, 2011c)--observatories that integrate social sciences, natural sciences, and engineering data in monitoring progress toward resilience. Breakthroughs in hazard and risk assessment will come from better constraints on the key parameters in the models that govern the systems responsible for disaster impacts, such as the role of clouds in climate models, the three-dimensional effects of basins on strong ground shaking in earthquakes, and improved estimates of seasonal and diurnal changes in populations in hazardous areas. Research is also needed on the role and function of natural defenses against natural disasters (e.g., the capacity of coastal wetlands to help absorb storm surge, the role of swamps along rivers for floodwater storage), many of which have been severely compromised by actions of people. Until we fully understand the full ecosystem functions and feedback loops of these natural defenses, it is difficult to meaningfully evaluate whether it would be more cost-effective to restore wetlands or swamps or simply build or continue to raise and strengthen a system of levees downstream. Research is also scant on the value of disaster mitigation and what factors strongly reduce losses. Targeted research into new materials and new processes for much more resilient construction of new buildings and infrastructure is needed, as well as assessment models of the role of retrofit standards to meet resiliency goals or effective strategies for addressing infrastructure interdependencies, . From a social science perspective, more research is required in modeling social capital within communities. Integration of information and modeling the connections between threats, vulnerability, exposure, sensitivity, and impacts also require more research, especially based on differences in geographic scale or time periods. One of the key themes in the report is that despite some level of information about disaster risk, individuals, communities, businesses, and

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THE FOUNDATION FOR BUILDING A RESILIENT NATION 61 political leaders may be reluctant to reduce risk to make the nation more resilient. The question is why? To address that question more research into the social and behavioral biases that affect the processing of risk information, how risk data could be more effectively communicated, and how such risk information translates into the adoption of resilience strategies could be helpful. Research on the next generation of technologies for communicating and sharing location-based risk information would also enhance resilience at all levels. SUMMARY AND RECOMMENDATIONS Understanding, managing, and reducing risk is an essential foundation for increasing resilience to hazards and disasters. Risk management is a continuous process, and the choice of strategies requires regular reevaluation in the context of new data, models, and changes in the socioeconomic and demographic characteristics, and environmental setting of a community. The risk management strategy that works best for a community is based on the available information, how it is communicated to the key interested parties, and the perception of risks and rewards for avoiding or mitigating risk. A variety of tools exists to manage disaster risk. These tools include structural (construction-related) measures such as levees, dams, disaster- resistant construction, and well-enforced building codes, and nonstructural (nonconstruction-related) measures such as natural defenses, insurance, zoning ordinances, and economic incentives. Structural and nonstructural measures are complementary and can be used in conjunction with one another. Risk management is at its foundation a community decision--including not only the immediately affected community, but also local, state, and federal levels of government and the private sector--and the risk management approach and will only be as effective if there is commitment to use risk management tools and measures. Recommendation: The public and private sectors in a community should work cooperatively to encourage commitment to and investment in a risk management strategy that includes complementary structural and nonstructural risk-reduction and risk-spreading measures or tools. The portfolio of tools should seek equitable balance among the needs and circumstances of individuals, businesses, and government, as well as the community's economic, social, and environmental resources. Examples from actual disasters and their aftermaths show that implementation of risk management strategies involves a combination of actors in local, state, and federal governments, NGOs, researchers, the private sector, and individuals in the neighborhood community. Each actor will have different roles and responsibilities in developing the risk management strategy and in characterizing and implementing the measure or tool, whether structural or nonstructural, to be added to the community's risk management portfolio.

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62 DISASTER RESILIENCE: A NATIONAL IMPERATIVE Some strategies can be implemented over the short term, while others may take a longer time. Table 2.2 is a potential template for decision makers to consider how to develop and implement risk management strategies and to manage expectations. The roles and responsibilities of the different actors are described in more detail in Chapters 5 and 6. One underutilized tool is investment in risk reduction through insurance and other financial instruments to enhance resilience. Such measures can improve mitigation of properties and infrastructure, but more importantly, can encourage the relocation of residences, businesses, and infrastructure through more risk-based pricing. Recommendation: The public and private sectors should encourage investment in risk-based pricing of insurance in which insurance premiums are designed to include multiyear policies tied to the property, with premiums reflecting risk. Such risk-based pricing reduces the need for public subsidies of disaster insurance. Risk-based pricing can serve as an incentive that clearly communicates to those in hazard-prone areas the different levels of risk that they face. Use of risk-based pricing could also reward mitigation through premium reductions and can apply to both privately and publicly funded insurance programs.

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