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Leveraging ERM in emergency management

Managing emergencies during COVID-19 requires a more structured and integrated approach

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Firefighters using walkie talkie, rescue operation Close Up Integrating ERM, strategy, communications and culture are vitally important when addressing emergency management situations. It is imperative public sector professionals manage risks with a portfolio view. Sound ERM practices must be forward-looking and designed to help leaders make better decisions, identify threats, and raise awareness for previously unknown opportunities to improve the efficiency and effectiveness of government operations.

This is especially true with the recent rise of natural disasters and the COVID-19 global pandemic. The United States tallied a bill of $45 billion in 2019 for weather and climate disasters, which included 14 disasters with damage exceeding a billion dollars each, according to the National Centers for Environmental Information. This marked the fifth straight year with 10 or more billion-dollar disasters. This dollar amount is lower compared to recent years because the past three years’ disasters have caused a total of $460 billion in damage, with 2017 holding the record high of $321 billion in damage in one year.

2019 billion-dollar natural disasters

The 14 individual billion-dollar disasters included eight severe storms, two tropical cyclones, three flooding events, and one wildfire event, all of which resulted in the deaths of 44 people and had significant economic impacts on the areas they affected.

Now, for the 2020 hurricane season, emergency managers face the unfortunate compounding factor of COVID-19. Compared to the physical force of a natural disaster, this new silent assailant has caused economic, physical and social disruption that has resulted in devastating mortality rates, widespread supply chain shortages and cancellations of sporting, religious and cultural events.

When considering the omnipresent force of a pandemic in conjunction with a disaster like a hurricane, the importance of sound ERM practices is more paramount than ever. During any disaster, ERM practices are conducive for preparedness, mitigation, response and recovery across agencies and communities. For example, forward-looking management decisions and balancing risks and the immediate need for resources and financial assistance enhances value to the taxpayer.

Also, a holistic approach across the extended enterprise – such as collaboration across federal, state, local and private sector organizations – ensures access to a wide range of resources. A discipline like ERM needs to be integrated into each phase and in every conversation around emergency management. Through adequate risk management, agencies can concentrate efforts toward reducing the impact and exercising prevention strategies such as mandatory evacuations to reduce harm to citizens and to mobilize humanitarian efforts. Also, a holistic approach across the extended enterprise – such as collaboration across federal, state, local and private sector organizations – ensures access to a wide range of resources.

ERM does not eliminate risk, but helps you prepare for uncertainty, including the uncertainty of when and where the next emergency will occur. Emergency management can consist of assessing the risk for a natural disaster like a hurricane, wildfire or flooding or an information technology disaster like a cyber-attack for ransom. In today’s climate, these risk assessments must also take into account the additional impact COVID-19 and resulting implications will have on any emergency responses.

For example, the guidelines of the Centers for Disease Control (CDC) on physical distancing, avoiding travel, wearing face coverings and stockpiling basic necessities to avoid shortages are part of the new paradigm and factors for assessing the risk environment in the era of COVID-19. Organizational leaders need to be prepared for many aspects of emergency management, and with agility and astute foresight they can mitigate unnecessary human costs due to COVID-19 during a future emergency.

How can enterprise risk management help? ERM helps to address the need for horizontal and vertical communication channels to facilitate transparency and informed decision-making. ERM helps to address the need for horizontal and vertical communication channels to facilitate transparency and informed decision-making. ERM puts a structure in place to look at the risks posed by likely events, helps to develop a risk-based approach to reduce the impact of the events, prepares for risks that cannot be eliminated, and puts a plan in place to reach out and recover appropriately when the emergency events do occur. Given the unpredictable nature of the pandemic, sound ERM practices additionally provide the benefit of a more agile, flexible structure with sufficient alternative plans in place.

An alignment of the four phases of emergency management – Preparedness, Mitigation, Response, and Recovery – with the seven ERM elements is presented in the figure below.

The seven ERM elements include:
  • Establishing the context
  • Initial risk identification
  • Analyzing and evaluating risk
  • Developing alternatives
  • Responding to risk
  • Monitoring and reviewing
  • Continuous risk identification

Seven ERM elements aligned to the four phases

The 4 phases of emergency management Phase 1 – Preparedness Preparedness takes place before an emergency occurs and can include plans or preparations made to save lives and to help response and rescue operations. Building a culture of preparedness in communities everywhere is essential. The average number of major disaster declarations has steadily increased, rising from an average of 24 per year in the 1980s to nearly 90 per year since 2010. Therefore, there needs to be an increased focus on preparedness from a risk-based approach.

Emergency preparedness saves lives, according to CivicPlus, an organization that provides technology solutions to local governments to help mitigate disasters. No matter how prepared your community becomes, you cannot prevent an unexpected local disaster, but you can prepare for one. Effective planning outlines goals and objectives during an emergency and it is critically important to prioritize planning efforts that address the respective threat or hazard before it emerges.

In the Federal Emergency Management Agency’s (FEMA) 2018–2022 Strategic Plan, building a culture of preparedness is one of FEMA’s three overarching Strategic Goals to unify and further professionalize emergency management across the nation. FEMA’s plan stresses that every segment of our society must be encouraged and empowered with the information it needs to prepare for the inevitable impacts of future disasters.

ERM elements for Preparedness

Phase 2 – Mitigation Experience has shown repeatedly that individuals, communities and businesses that manage risk through insurance recover faster and more fully after a disaster. Mitigation involves preventing future emergencies or minimizing their effects. Mitigation activities can include any measures that reduce the chance of an emergency occurring or reduce the damaging effects of unavoidable emergencies. Agencies must spend time and energy on reducing the likelihood or impact of the risk or transferring the risk by leveraging insurance. One of the primary functions of mitigation planning is to enable the organization to identify risks prior to a disaster to directly limit the impact of a disaster, should one occur. In the FEMA Strategic Plan, it states insurance is an effective tool to transfer risks away from disaster survivors and enable rapid recovery. Experience has shown repeatedly that individuals, communities and businesses that manage risk through insurance recover faster and more fully after a disaster.

According to an independent study in 2018 by the National Institute of Building Sciences, every dollar the Federal government invests in mitigation saves taxpayers an average of $6 in future spending. Effective mitigation is truly paramount in a pandemic environment, due to the many unprecedented compounding factors emergency managers now face. To name a few, the pandemic has upended existing supply chains, significantly reduced state and local governments’ budgets, required personal protection equipment (PPE) for all persons, not just medical professionals, and demanded social distancing in all stages of response to this emergency. In order to effectively respond to these elements and prevent the unnecessary loss of life, the onus is on emergency management response teams to develop and implement sufficient plans to accommodate all of the ramifications of responding to a traditional emergency in a viral environment.

ERM elements for Mitigation

Phase 3 – Response Response involves putting preparedness plans into action and takes place during an emergency. It can include actions taken to save lives and prevent further property damage in an emergency situation. Response encompasses the activities that address the short-term, direct effects of an incident. Response also includes incident mitigation activities designed to limit the loss of life, personal injury, property damage, and unfavorable outcomes.

Emergency responses this hurricane season will have to be more flexible than ever, accommodating FEMA’s adapted posture and procedures for implementing disaster assistance and program delivery. In addition to remote coordination, emergency managers will have to have a response plan that accommodates the risks of the pandemic, such as sufficient non-congregate sheltering arrangements for evacuees, or health screening procedures and infection response protocols for all shelters.

An effective response, in this sense, can mitigate loss of life or suffering from the novel coronavirus, while reassuring citizens of their safety. Effective response yields decisive results, as during Hurricane Katrina, when Mississippi Power was able to restore power to all customers that could accept it in 13 days, which was half the time that was originally projected. Their response showcased the importance of having an effective organizational response ready for such disasters.

ERM elements

Phase 4 – Recovery Recovery takes place after an emergency and seeks to return the community, businesses, or other entities to conditions better than or the same as those that existed before the emergency event. The recovery phase requires balancing the more immediate need to return the community to normalcy with the longer-term goal of reducing future vulnerability. Recovery includes the reactions and risk responses to disasters, which varies considerably, depending on the incident.

Further, it is essential that recovery efforts are delivered in an equitable and impartial manner, receiving input from and effecting all community members adequately. Recovery efforts are primarily concerned with actions that involve rebuilding destroyed property, re-employment, and the repair of other essential infrastructure. Recovery efforts must also be constructed to support businesses that have been impacted not only by a disaster, but also by COVID-19 restrictions. Further, it is essential that recovery efforts are delivered in an equitable and impartial manner, receiving input from and effecting all community members adequately.

Successful recoveries are dependent on what happens during the first three phases of emergency management. Even with this increased focus on mitigation, preparedness, and response, disasters will still occur and recovery will still be required. Those organizations that have invested in continuous risk identification, and specifically in recovery planning, are shown to have not only minimized losses and costly interruptions, but have also been able to provide essential emergency services to their customers.

ERM elements recovery

What more can be done? It is important to remember that effective planning and responses for all types of emergencies is achieved by coordination and cooperation of many groups and individuals throughout the four phases of emergency management described above.

Those who specialize in emergency management have made strides by incorporating some ERM elements into their emergency management processes, but more can be and needs to be done due to the increased velocity and severity of disasters. We need to think about the broader application of ERM, specifically the seven elements of ERM described above, and how this discipline can be applied to better reach the goal of mitigating, preparing, responding and recovering from emergencies. We need to continue to discuss how ERM can help in the achievement of a true portfolio view of an agency’s objectives (strategic, reporting, operations and compliance) to prepare for emergency management events.

Today’s emergency managers face the challenge of achieving these goals during disasters and the COVID-19 pandemic, thus severely limiting the tolerance for error. However, in following the seven elements of ERM, you can proactively prepare, mitigate and manage concurrent events, while mobilizing resources and evoking strategies that can ultimately reduce damage, save lives and enable mission achievement during a time of historic events.

Contacts:

Bobbi-Jo PankajBobbi-Jo Pankaj
Managing Director, Risk Services, Public Sector
T +1 703 637 2915


Wendy Morton-Huddleston Wendy Morton-Huddleston
Principal, Public Sector Advisory
T +1 703 637 2853