--> Gill Blog: The Relevance of FEMA after Charley

Gill Blog

Monday, August 16, 2004

The Relevance of FEMA after Charley

In the wake of Hurricane Charley and the task of managing the $11B disaster (a fact that will no doubt wreak havoc among insurers), there was a fascinating article in today's Wall Street Journal about the relationship between FEMA and the Department of Homeland Security, an article I would strongly recommend.

FEMA was set up in 1979 by President Carter to deal with the challenge of keeping government operational in the event of an attack by the Soviet Union. As the influence of the Soviets waned, culminating with the fall of the Berlin Wall, so too did FEMA. In fact, in the early 90's policy-makers began discussing the the agency's permanent closure, as it seemed more and more like a by-product of a bygone era.

This all changed with Hurricane Andrew in 1992. At that time, it seemed as though FEMA was needed more than ever, yet resources were not made available in a timely fashion. As this article points out, FEMA's efforts during Andrew may have played a role in the first President Bush losing Florida to Bill Clinton in 1992. When President Clinton arrived on the scene, FEMA's mandate and rank in the pecking order of federal importance were significantly enhanced.

From '93 onwards FEMA was given the responsibility of providing timely relief to all types of disruptive events, and was firmly grounded in an 'all-hazard' risk approach. Since the terrorist attacks, however, much has changed. For one, FEMA has been rolled into the Department of Homeland Security, an agency created to take a 'terrorism' risk approach. The two philosophies are now at odds and discussion continues as to how to keep FEMA, and its post-'93 mandate relavent at a time when terrorism-risk mitigation strategies trump all.

The telling sign will always be how resources are allocated. Perhaps the destruction and lack of preparation for Charley -- a storm that took a sudden turn right when it wasn't expected -- will force DHS to reassess the role of FEMA in these uncertain times.


This link shows satellite imagery of Charley's devestation -- it's really quite numbing. As of August 19, the following facts have emerged:
Charley's insured losses were pegged at $7.4 billion, down from projections as high as $14 billion derived from computer models
Charley is likely to become the nation's fourth- costliest disaster, after the attacks of Sept. 11, the 1992 Hurricane Andrew and the 1994 Northridge, Calif., earthquake.
Charley will be the second- most expensive hurricane after Andrew, which devastated South Florida at a cost of $26.5 billion, including $15.5 billion in insured losses.


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