13. Waste-water processing system

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timer Asked: Dec 5th, 2020

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282 Risk Analysis and Security Countermeasure Selection Modes Access control has two modes: • Passive strategies: screening of employees, contractors, and vendors • Develop screening program for employees, contractors, and vendors • Screen for criminal background and drug abuse (and financial responsibility where possible) • Enforce the screening program strictly • Active strategies: screening of entry by employees, contractors, vendors, and visitors. Access control should be arranged in layers, typically including • Public layers will be nearest the main public door(s), such as a public lobby, customer waiting area, or service desks. • Semipublic areas are areas where the general public may not freely go but where they may be escorted, such as to an interview or triage room or the emergency department in a hospital. • Controlled areas are for those individuals with authorization, such as nonpublic office floors, mechanical rooms, auto mechanic work areas, airport tarmacs, and so on. • Restricted areas are those that require a high degree of vetting and where access is limited to a relatively small number of persons, such as research and development areas, the boardroom, the main information technology server room, cash vaults, counting rooms, and so on. Access control can be achieved by technology or personnel means. There are two basic types of access control for both • General access control • Positive access control General access control assumes that if one person in a group has access to a space, anyone they are escorting is also permitted. This approach is commonly used in employee work spaces and the like, where an access card reader on a suite door controls access to the space. General access control should not be used where it is important to assure that each person in a group has access privileges. This is because of the phenomena of an unauthorized person “tailgating” entry behind an authorized person as the door is opened. Although many organizations have tried to encourage employees to vet visitors who try to tailgate, none I know have fully succeeded. Positive access control uses technology or guards to assure that each person is checked to be sure that they are authorized to enter the space. Examples of positive access control include card reader controlled revolving doors and turnstiles, theater or sports event ticket checkers, and airport boarding screening. DETERRENCE 282 Goals Deterrence is the ultimate goal. Deterrence achieves security without intervention against a threat actor. Deterrence builds its own momentum. The longer attacks are Countermeasure Goals and Strategies 283 Remove all metal objects before passing through metal detector FIGURE 15.1 Security checkpoint. deterred, the less likely it is that an attack may take place. But do not depend on deterrence. Deterrence occurs when potential threat actors evaluate the risks and rewards of an attack and determine that the risk is not worth the reward. • For terrorists, this could mean that an attack is not likely to succeed, that their attack would not capture the media’s attention, or that they could be perceived negatively by their own constituency. • For economic criminals, it could mean that they may not be able to access the desired assets, that they may not be able to leave with them, or that the likelihood of capture after the heist would be high. • For violent criminals, this could mean that the threat actor could not reach his target, could not succeed in the attack, might not escape, or might be captured later. • For subversives, this could mean that they might not succeed in subverting the normal operations of the organization. • For petty criminals, this could mean that they might not be able to carry out their crime or would likely be captured in the act or later. Strategies Deterrence is achieved through making countermeasures so visible that possible threat actors think twice about their crime. Deterrence countermeasures can include architectural hardness, access control measures, guards, obvious cameras, witnesses, alarms, alarm signs, and so on. To be effective as a deterrent, countermeasures must be visible and must seem to create too much risk to carry out the attack. Ultimately, the entire baseline security program is about deterrence, and it creates the environment for all the other countermeasure functions (Figure 15.2). There are no such things as deterrent-specific countermeasures. All visible countermeasures can act as deterrents, but no countermeasures deter alone. Deterrence is a side effect of the countermeasure’s other (primary) role. Countermeasures deter because the potential threat actor believes that the countermeasure creates risk to him. That risk is 284 Risk Analysis and Security Countermeasure Selection FIGURE 15.2 Deterrence. the result of the countermeasure serving its primary role of limiting access and enabling detection, assessment, response, or evidence gathering. DETECTION Goals Although at first the reader may be tempted to think that detection means catching the crook in the act, in fact every threat actor must carry out a plan in order to attack a facility, and detection also means detecting this plan. The basic steps in every threat action, whether it is terrorism or vandalism, include • • • • • • Select an appropriate target for an attack Surveil the target to determine the target’s vulnerabilities Determine the best way to carry out the attack Plan the attack (the approach, the attack, and the escape) Test the target to determine if the vulnerability assessment is correct Execute the attack • Enter • Establish and maintain control • Establish and maintain countersurveillance • Execute the objective • Escape For petty crimes, all these steps may occur in one linear timeline. However, the more valuable the asset, the more important the attack is to the threat actor’s strategic goals, the more robust the countermeasures, and the more time is required to carry out all these steps. Interviews with highly successful criminals indicate that the planning cycle for Countermeasure Goals and Strategies 285 some crimes can take months or even years. This gives the target many opportunities to detect the plan through surveillance and the interception of planning communications. Strategies Strategies include surveillance detection and attack detection. Surveillance Detection Most people think of detection as occurring during an attack; however, detection can also occur during surveillance. Surveillance is required for virtually every attack in order to • • • • Select the target Surveil target vulnerabilities Determine the best way to carry out the attack Test the target to determine if the vulnerability assessment is correct Additionally, the longer a criminal spends time with his eyes on the target, the more interaction he may have with individuals working in the target space. Each individual interaction gives the target an opportunity to recognize surveillance, attack planning, or testing and to interrupt the attack before it occurs. A good countersurveillance program is highly useful to all organizations where asset values are high and especially where there is a possibility of violence occurring in the carrying out of a crime. For terrorism, a good countersurveillance program is an absolutely essential component of any workable terrorism countermeasures program. A good countersurveillance program includes • • • • Ample use of video surveillance in exterior and public spaces Trained and alert security officers Trained and alert console officers Loitering detection software on the video system Attack Detection Once an attack of any kind is underway, whether it is terrorism, economic crime, violent crime, subversive action, or petty crime, it is important, where possible, to be able to detect the crime underway. Detection countermeasures may include • • • • Intrusion detection system on property and building perimeters Intrusion detection system applied to critical passageways and internal spaces Duress alarms at critical counters and desks Hold-up alarms Intrusion detection systems on property and building perimeters may include fence detection systems, microwave and infrared beams, seismic detectors, pneumatic line detectors, video fence line detection systems, glass break detectors, and door position switches. Internal space detection systems may include door position switches, area motion detectors, and video motion detectors. Duress alarms may include hidden finger switches, footswitches, and so on. Hold-up alarms may include duress alarms and bill traps (the last bill removed in a cash drawer triggers a silent alarm). 286 Risk Analysis and Security Countermeasure Selection Alarms may be either silent or audible. It is best to use an audible alarm if the property is vacant such as at nighttime, when the audible alarm could itself act as a deterrent, frightening the intruder away. Silent alarms are best where an audible alarm could be false or a nuisance, where on-site security staff can respond quickly, and where such a response would not possibly escalate the crime to the point of violence. ASSESSMENT Goals When an attack is detected, it is then necessary to assess the threat for the following characteristics: • • • • • • Is the detection itself real, false, or a nuisance detection? If the detection is real, what is the level and nature of the threat actors? What is their goal? What weapons are they carrying? What are their tactics? Does this appear to be a unfolding as a property or violent crime or a property crime with potential for violence? • Are the threat actors employing countersurveillance methods? • How are they dressed? How can law enforcement distinguish the threat actors from ordinary employees or customers? • What is their apparent exit strategy? Is the Detection Itself Real, False, or a Nuisance Detection? Many alarms are either false or nuisance alarms. Before responding to any alarm, it is useful to investigate and assess to see if the alarm is real. This can often be done by using a second alarm device as a confirmation or by using a second technology to confirm it. For example, on perimeter alarms where nuisance alarms are very common, it is useful to have two types of alarm detection technologies, each having different nuisance modes and both working together. Consider, for example, the use of infrared beams and fence line detection, where infrared is subject to nuisance alarms from blowing newspapers or animals and the fence line detection is subject to nuisance alarms from nearby trains. If only one alerts, it could be a nuisance alarm, but when both do, it is confirmed. Video cameras can also be used to confirm the alarm when the presence of an intruder can be seen on camera. If the Detection Is Real, What Is the Level and Nature of the Threat Actors? Once confirmed, it is important to know the nature of the threat actors. How many threat actors are there? Does their intrusion seem organized or chaotic? Is there an obvious leader? Is the group cohesive and professional or are they displaying anxiety and fear? What Is Their Goal? Are they carrying a sign protesting the activities of the organization or are they carrying automatic weapons? How many threat actors are there? Can their intentions be determined by their actions? 288 Risk Analysis and Security Countermeasure Selection facility entries in order to get a positive identification of any threat actors who enter the facility and to determine what external support they have in terms of lookouts and getaways. It is very useful to have a video camera viewing every area where a threat action could reasonably occur, including all entry control locations. This allows both the detection and assessment of crimes in progress. It is also very useful to have a two-way voice station (intercom station or station without call button) near the camera wherever a threat action could occur. This allows interruption of the threat action by a remote console operator, and, for many crimes, this is enough to end the crime. RESPONSE Goals Once a threat action is detected, a response is possible. Responses to threat actions could include • Take no direct action to counter the threat actors, instead try to minimize any potential harm to innocent people • Gather evidence for an investigation and for a post event analysis, resulting in scenario planning and training later • Call others (such as the police) for help • Intervene directly against the attack to stop it and/or capture the threat actors Before any response is undertaken, it is necessary to formulate an appropriate response. I propose that the best time to do this is before any attack, when heads are clear and planning time is leisurely. It may be necessary to adjust the plan if an actual attack takes place, but at least there will be a response plan in place. For example, before September 11, 2001, it was the policy of airlines to cooperate with airplane hijackers and let negotiators arrange for freedom of the hostages once back on the ground. This strategy included allowing hijackers access to the cockpit to avoid casualties on the plane. However, when United Flight 93 passengers used their cell phones to call loved ones after the plane was hijacked, the passengers learned that another plane had crashed into the World Trade Center, and the passengers themselves changed the strategy from one of cooperation to one of counterforce. Although this strategy did not save their own lives, it did save many lives in the ultimate target in Washington, and as such, it was certainly an act of heroism. Strategies Responses may also include delaying the threat actors, denying them access to the target asset, voice communications for negotiations, and ultimately force-on-force. As a design consultant, I am a big believer in using technology to counter threat actors instead of placing lives at risk. The use of reactive electronic automated protection systems (REAPS technologies) may include two-way voice communications, delaying technologies, disruptive technologies, and active force technology for direct use against Countermeasure Goals and Strategies 289 threat actors. See Chapter 16 for more on REAPS technologies.* Also REAPs technologies are covered in great detail in my book Integrated Security Systems Design. Intercoms are the forgotten technology of security. Security intercom systems, along with the ample use of security video systems, allow for immediate assessment of threat actions without dispatching a guard, which could escalate the crime to violence. One of the most effective tools against convenience store crimes has proven to be a two-way voice communication system that allows console officers in a remote security command center to speak directly to store robbers, alerting them that they are not only being recorded by video cameras, but that their identification is solid, that police have been called and are on the way, and that any escalation to violence will result in more severe charges by law enforcement. This has proven to be effective in getting robbers to stop the robbery and leave the premises immediately without further harm to the store employees or customers and in many cases also without completing the robbery. It is very useful to have a two-way voice station (intercom station or station without call button) near the camera wherever a threat action could occur. This allows interruption of the threat action by a remote console operator, and for many crimes, this is enough to end the crime. EVIDENCE GATHERING Goals The goals of evidence include providing resources for investigations, strategy development, and training (Figure 15.3). Evidence sources may include • • • • • Video footage Audio recordings Fingerprints Crime scene forensics Computer forensics Strategies The security program should be designed to gather evidence from its outset and personnel should be trained to protect physical evidence. Camera placements should be useful to identify threat actors as they approach and enter the facility and at the locations where crimes are most likely to occur. During the risk analysis, this requires careful consideration of the types of threat scenarios that are most likely and the locations where such scenarios might occur. All these should be noted in the report. Audio should be recorded on all outgoing calls to emergency responder phone numbers (911 in the United States and 112 in other countries) and on all active security intercom stations. Security officers should be trained to secure a crime scene immediately after a crime until law enforcement arrives. Security barrier marker tape (“Crime Scene—Do Not * For even more on REAPS technologies, see the author’s book Integrated Security Systems Design: Concepts, Design and Implementation.1 290 FIGURE 15.3 Risk Analysis and Security Countermeasure Selection Evidence gathering. Cross”) should be kept in stock for this use. Any computers that could have been involved in a crime should be unplugged from the network but left powered on, secured, and sealed for the arrival of a law enforcement or internal computer forensics team. COMPLY WITH THE BUSINESS CULTURE OF THE ORGANIZATION Goal Each organization has its own unique business culture. It may be formal or relaxed, topdown or lateral, open for free movement of the public or imposing restricted movements. The security program should be configured to comply with the business culture of the organization. All security measures have some consequences both for normal business operations and for the business culture. Both should be minimized as much as possible. I have been consulted on many projects to correct failed security programs that, on review, were sound in principle but did not take the organization’s business culture into Countermeasure Goals and Strategies 291 account and thus were not accepted by the users. The users are stakeholders in the system. If their points of view and expectations of convenience and perceived intrusion are not taken into account, the security provisions will not be accepted. This is the most important nontechnical element that addresses directly the success or failure of the system. People will naturally take the path of least resistance. And, if after many years of moving freely, they are suddenly confronted by a queue or a barrier, they will attempt to circumvent it because they are used to being able to move freely through a portal without impediment. If there is a sneak-path, they will use it. If there is a guard, they will argue with him or her. There will be complaints, and pressure will be applied to the security manager to change the procedures or technology. It is important to take traffic flow, throughput, and people’s perceptions of how they are being treated by management into account. Strategies In the countermeasure planning phase, it is important to understand the organization’s business culture as much as possible. This is perhaps the most difficult task that a security practitioner has to carry out. Business cultures are rarely well documented. Culture by definition is that body of knowledge that is common and allows a common communication based on the shared assumptions of those working together. For example, in one high-security project, the entire campus could have been easily secured by moving all visitor parking to an adjacent parking lot and having all visitors clear through a single visitor center. However, the business culture of that organization required that all visitors be granted access to parking on the campus itself, thus allowing visitors past the visitor center. Security took second place to business culture. It should be assumed that the security program should impede the movements of people as little as possible and should assure that everyone is treated with consideration, kindness, and respect. MINIMIZE IMPEDIMENTS TO NORMAL BUSINESS OPERATIONS Goals As with business culture, all security measures have some impact on normal business operations. The security program should impede normal business operations as little as possible. Strategies The key impediment to business operations is almost always in the area of access control. A key strategy of controlling access without creating the sense of an impediment is to rely more on technology than on people for security access control. It takes more time to clear a staffed checkpoint than to clear through a card reader. And people tend to see technological delays as part of the environment. However, when the delay is associated with a security guard, they tend to personalize the screening action (people sometimes presuppose a bias against the person by the screener and infer an intent on the part of the security officer to delay the person). No such intent can be imposed on a card reader, as technology has no capacity to develop intent or biases or to distinguish any one person from another. 292 Risk Analysis and Security Countermeasure Selection This strategy has other benefits as well. Because technology does not distinguish between people, it treats everyone fairly and cannot be compromised by threat, intimidation, or enticement. All security officers dealing with the public should be trained to be gracious under fire and not to personalize any verbal abuse. In areas where people are carrying bags or totes, provisions should be made to use as few hand actions as possible. In such cases, the use of photo IDs as an access vetting measure can help speed people along. SAFE AND SECURE ENVIRONMENT Goals The aim is to help to create an environment where people feel safe and secure and can focus on the purpose of the organization. Strategies The use of crime prevention through industrial design (CPTED) principles helps to create a safe and secure environment and conveys a feeling of safety and security to all. Good lighting, gracious guards, well-maintained facilities and security equipment, good wayfinding signage, and security awareness inserts in the company newsletter all contribute to a feeling of well-being on the part of users. DESIGN PROGRAMS TO MITIGATE POSSIBLE HARM FROM HAZARDS AND THREAT ACTORS The security program should include elements to deal with unwanted exceptions such as • • • • • • • • Intruders and offenders Disruptive people Medical emergencies Natural disasters Civil disorder and riot Loss of business continuity Chemical, biological, radiological emergency Challenges to the security program from outside and inside sources (Table 15.1) SUMMARY Introduction The name security countermeasures implies correctly that these are measures taken to counter a threat action. In an ideal world, security countermeasures would be so Chapter 15 Countermeasure Goals and Strategies INTRODUCTION On completion of this chapter, you will understand why security countermeasures are required and the elements of countermeasure objectives, goals, and strategies. The name security countermeasures implies correctly that these are measures taken to counter a threat action. In an ideal world, security countermeasures would be so effective as to completely eliminate the will of potential threat actors to take action. While most people believe that this is not possible, in fact it has been done. There are actually numerous examples, but perhaps the best known one is the Fort Knox gold depository. As one can imagine, there have been many potential threat actors who would have been interested in accessing the gold at Fort Knox since it was built. But none have even attempted it. Countermeasures, including a formidable building and complex, heavily armed guards, layered detection systems, and automatic weapons, are so well developed that no one has ever attempted a robbery there. And do not forget it sits next to the largest assembly of U.S. Army tanks and tank crews in the world. Compare that to the average U.S. convenience store, which as a class have the highest incidence of robberies of any fixed asset, including many fatal violent attacks. It is worthwhile to compare the two in order to develop study models of risk mitigation. Fort Knox has multiple layers of protection for its assets, including heavy arms and multiple layers of detection systems. Its focus is on access control. Convenience stores have little if any protection; often the cash register drawer is directly accessible by reaching across the counter from the public side. Access to the store is free to anyone, good or bad. There are often no responsive weapons and no detection until a robbery is announced by the threat actor himself. The greatest protection is usually a video camera system, which records the robbery but cannot intervene. Access control is often limited to a hopeful expectation of politeness and the occasional but undependable entry of a police officer. In the first of these examples, access control is heavy. In the other, access control is virtually nonexistent. The obvious lesson is that keeping bad people out is good for security. I am not suggesting that all facilities should be equipped like Fort Knox, because most organizations could not function with this level of access control and the presence of automated 50-caliber weapons and guards on parapets with scoped weapons would be not only a deterrent to crime but a deterrent to normal business. 279 280 Risk Analysis and Security Countermeasure Selection Thus, countermeasures should be focused not only on security measures but also on being balanced with the needs of the organization’s daily business needs. Like all other business programs, compromises are necessary. What, then, are the goals of countermeasures, given that compromises are necessary? COUNTERMEASURE OBJECTIVES, GOALS, AND STRATEGIES All security countermeasures have the broad goal of adjusting the behavior of potential threat actors so that they do not pose a threat to the organization. There are three main goals for all security countermeasures. These are • Where possible, identify and deny access to potential threat actors • Deny access to weapons, explosives, and dangerous chemicals (except for legitimate exceptions, which should be well controlled and monitored) • Make the environment suitable for appropriate behavior and unsuitable for inappropriate, criminal, or terroristic behavior; and mitigate the actions of both hazards and threats Implementation objectives and strategies include • • • • • • • • • Control access to the target, denying access to possible threat actors Where possible, deter threat actors from acting Detect any threat action Assess what has been detected Respond to any active threat action Gather evidence for prosecution, investigations, and training Comply with the business culture of the organization Minimize any impediment to normal business operations Help to create an environment where people feel safe and secure and can focus on the purpose of the organization • Design programs to mitigate possible harm from hazards and threat actors Each aspect of the overall security program has the ability to support one of the three main goals. An incomplete example of how to map these is illustrated in Table 15.1. You can use this as an example to help build your own list of countermeasures. ACCESS CONTROL Goals Access control should be sufficient to facilitate access by authorized users and to deny access to unauthorized persons to all critical areas. Unlike Fort Knox, most organizations rely on access by the public to their facilities. However, access should not be universal. All members of the public and all employees do not require full access to all areas of a facility. In the most humble shop, there is a public area and a storeroom or office. In complex facilities, access may be layered so that one needs progressively higher access authorization as one moves deeper into the facility. Table 15.1 Examples of Countermeasure Goals and Functions Countermeasure Goals Countermeasure Functions Access Control Access control, screening posts, and employee screening Deny access to weapons, explosives, and dangerous chemicals Make the environment suitable for appropriate behavior and unsuitable for inappropriate, criminal, or terroristic behavior; and to mitigate the actions of both hazards and threats Screening, guard posts, and procedures Visible devices, signage, guards, and procedures Signage, guards, and procedures CPTED CPTED design, design, policies and policies and procedures, training programs, procedures, training and security programs, awareness and security programs awareness programs Detection Assessment Delay Operable Guards, dogs and Console, barriers and guards, and alarm devices guard posts security including video awareness motion policy Detectors, dogs, Screening posts, Operable barriers and guards, and detectors, guard posts procedures dogs, and patrols Patrols and reports by organization members Patrols and reports by organization members See above Response Evidence Console, guards, CCTV, intercoms, and witness operable reports barriers, and intercoms Console, guards, CCTV, intercoms, and witness operable reports barriers and intercoms See above CCTV, intercoms, and witness reports Countermeasure Goals and Strategies Identify and deny access to potential threat actors Deterrence 281 282 Risk Analysis and Security Countermeasure Selection Modes Access control has two modes: • Passive strategies: screening of employees, contractors, and vendors • Develop screening program for employees, contractors, and vendors • Screen for criminal background and drug abuse (and financial responsibility where possible) • Enforce the screening program strictly • Active strategies: screening of entry by employees, contractors, vendors, and visitors. Access control should be arranged in layers, typically including • Public layers will be nearest the main public door(s), such as a public lobby, customer waiting area, or service desks. • Semipublic areas are areas where the general public may not freely go but where they may be escorted, such as to an interview or triage room or the emergency department in a hospital. • Controlled areas are for those individuals with authorization, such as nonpublic office floors, mechanical rooms, auto mechanic work areas, airport tarmacs, and so on. • Restricted areas are those that require a high degree of vetting and where access is limited to a relatively small number of persons, such as research and development areas, the boardroom, the main information technology server room, cash vaults, counting rooms, and so on. Access control can be achieved by technology or personnel means. There are two basic types of access control for both • General access control • Positive access control General access control assumes that if one person in a group has access to a space, anyone they are escorting is also permitted. This approach is commonly used in employee work spaces and the like, where an access card reader on a suite door controls access to the space. General access control should not be used where it is important to assure that each person in a group has access privileges. This is because of the phenomena of an unauthorized person “tailgating” entry behind an authorized person as the door is opened. Although many organizations have tried to encourage employees to vet visitors who try to tailgate, none I know have fully succeeded. Positive access control uses technology or guards to assure that each person is checked to be sure that they are authorized to enter the space. Examples of positive access control include card reader controlled revolving doors and turnstiles, theater or sports event ticket checkers, and airport boarding screening. DETERRENCE Goals Deterrence is the ultimate goal. Deterrence achieves security without intervention against a threat actor. Deterrence builds its own momentum. The longer attacks are 200 Introduction to International Disaster Management Some membership organizations for public entities sponsor pools or endorse insurance products that are then marketed to their members. However, sponsorship or endorsement by a membership organization does not guarantee that the insurance is broad enough to meet the needs of a given entity or that the insurance provider is financially stable. A public entity must apply the same due diligence to a consideration of these programs that it would apply to a comparison of available commercial insurance programs. (Reiss, 2001) OBSTACLES TO MITIGATION Mitigation is not yet practiced to its fullest extent. Though the potential exists to reduce hazard risk throughout the world through the various mitigation measures discussed in the previous section, among others, formidable obstacles stand in the way. The first and primary obstacle is cost. Mitigation projects can be very expensive. Though governments may have the resources to carry out even very costly mitigation projects, they choose not to in favor of spending money on programs that are perceived to be more pressing. The reality is that governments maintain limited funds to support development, and many consider hazards to be chance events that might not occur. When drafting their budgets, they therefore tend to favor programs requiring regular funding, such as military, educational, economic, or infrastructure projects. The second obstacle is low levels of political support or “buy-in.” It is important for politicians to maintain their high public standing, so they tend to prefer projects that increase their stature over risky endeavors that may not offer a return in the short run. Mitigation, which is often conducted during periods that no imminent threat exists and which may require some level of sacrifice or hardship, may be hard to “sell” to the local politicians. Convincing the local decision-making authority of the need to undertake a mitigation measure is crucial to getting the project off the ground. Sociocultural issues are a third potential obstacle. Mitigation measures almost always result in a change of some sort, whether to place (location), practice, or a physical structure. People and cultures may tie meaning to these factors and resist any project that involves an alteration they find undesirable. Disaster managers unaware of these sociocultural ties are likely to create mitigation measures that do not take these important issues into consideration, dooming their program to failure before it even begins. Risk perception is the fourth major obstacle to mitigation. How people perceive a hazard that threatens them will play a large part in what they do to prevent it, and how much they are willing to sacrifice to avoid it. First, the hazard must be recognized. Second, the two risk components of consequence and likelihood must be accurately perceived. And third, there must be a belief that the hazard risk is reducible. Inaccuracies in any of these three areas can quickly derail a mitigation effort. ASSESSING AND SELECTING MITIGATION OPTIONS Once a comprehensive hazards risk analysis and assessment have been completed, as described in Chapters 2 and 3, and risk mitigation options have been generated for each hazard on the prioritized list, disaster managers can begin assessing their options. Each hazard may have several risk mitigation options to choose from, each option resulting in different impacts upon society. Several factors must be considered when assessing each identified risk mitigation actions, including: ● ● ● The expected impact that each risk mitigation option will have on reducing the identified hazard risks and vulnerabilities The probability that each action will be implemented Mechanisms for funding and leveraging of resources necessary to implement each option Chapter 4 Mitigation IMPACT OF RISK MITIGATION OPTIONS ON COMMUNITY RISK REDUCTION The most critical issue in assessing a risk mitigation option is determining its impact on reducing the identified risk or vulnerability in the community. Several factors must be considered when assessing the risk reduction to be accomplished through individual mitigation options or groups of mitigation options. These factors, each of which is analyzed according to the six categories of mitigation listed above, include: ● ● ● Reduced number of deaths and injuries Reduced property damage Reduced economic loss PROBABILITY THAT EACH ACTION WILL BE IMPLEMENTED Determining the probability that an individual mitigation action or a group of mitigation actions will be implemented is critical in determining feasibility. Numerous factors impact the probability that an individual mitigation action or a group of mitigation actions will be implemented, including: 1. Political support. Without sufficient political support, it is difficult or impossible to implement mitigation actions. Strong political support, developed over the course of the planning process, increases the probability of implementation. Weak political support, as a result of limited or even no understanding of the risk management strategy, decreases the probability of implementation. 2. Public support. Support from the public is critical, especially when such support is needed to pass funding bills and regulatory restrictions to enable the implementation of particular mitigation actions. Public support is most easily acquired through public participation throughout the entire disaster management process, including the implementation phase. 201 3. Support from the business sector. Business owners play a key role in their communities, and so their support for a community risk management strategy is critical for successful implementation. Businesses may have much to gain, but also have much to lose, from the consequences of a particular mitigation option. The business community generally plays a large role in any community in generating funding and public support for risk management actions and, likewise, is a good partner in mitigation. 4. Support from nonprofit and interest groups. A variety of groups are active in any community, including environmental groups, voluntary organizations, neighborhood and church organizations, and labor unions, to name a few. Their participation helps generate support among community members and their families. Conversely, their opposition can generate great resistance and even legal action that could delay or foreclose the implementation of mitigation actions. 5. Cost. The cost of a mitigation action can impact the probability of its implementation. The best way to mitigate cost issues is to educate political leaders, the public, the business sector, and nonprofit and community groups of the expected benefits of the action and the expected reduction in casualties and property losses when the next disaster strikes. If a mitigation option has been analyzed accurately and has been chosen because its benefits clearly outweigh its costs, then selling it to these stakeholders is possible. Changing risk perceptions to match reality is the primary obstacle. 6. Long-term vs. short-term benefits. Political leaders and business executives are sensitive to the need to produce immediate results, either in their term of office or in the next business quarter. This may cause them to support shortterm actions that will produce fast, identifiable results. The long-term, sustainable option is always the best, though convincing people may not be easy when cheaper, shorter-term options exist. 202 Introduction to International Disaster Management might not work, but without public support, that the taken action will almost certainly fail. THE STAPLEE METHOD OF ASSESSING MITIGATION OPTIONS There are many methods by which the hazards risk management team can assess the mitigation options that they have generated for each identified hazard risk. One method, or framework as it is often called, that has been developed by FEMA is the STAPLEE method. STAPLEE guides the disaster managers in their assessment by utilizing a systematic approach for addressing options. The term “STAPLEE” is an acronym that stands for the following evaluation criteria: ● ● ● ● ● ● ● Social Technical Administrative Political Legal Economic Environmental Each of these terms represents an opportunity or constraint to implementing a particular mitigation option. Because communities are generally very different in their overall makeup, a single mitigation option analyzed according to the STAPLEE criteria may produce very different outcomes in different places. Each criteria considers a different aspect of the community and requires different methods of information collection and analysis. There is no definable or identifiable priority or weight assigned to any of these criteria—the order of the letters in the acronym was determined by the word they formed (which was meant to be easy to remember). The criteria include (adapted from FEMA, 2005b): 1. Social. A mitigation option will only be viable if it is socially accepted within the community where it is implemented. The public is instrumental in guiding decisions such as these through their support or lack thereof. Even with public support, a proposed mitigation option Disaster managers must have a clear understanding of how the mitigation option will affect the population. They must investigate several questions that will guide their interpretation of this criterion, including: ● ● ● ● Will the proposed action adversely affect any one segment of the population? Will it give some disproportionate benefit to only one segment? Will the action disrupt established neighborhoods, break up legal, political, or electoral districts, or cause the relocation of lower-income people? Is the proposed action compatible with present and future community values? Will the actions adversely affect cultural values or resources? 2. Technical. If the proposed action is investigated and found to not be technically feasible, it is probably not a good option. Additionally, it is important to investigate, when looking into the technical feasibility of each option, whether it will help to reduce losses in the long term and whether it has any secondary effects that could nullify its benefits. By addressing the following questions, the hazards risk management team can determine the suitability of their proposed actions based on the actual degree of help those actions will ultimately provide: ● ● ● How effective is the action in avoiding or reducing future losses? It is important that the measures taken are able to achieve the anticipated results, not a fraction thereof. Will it create more problems than it fixes? Does it solve the problem or only a symptom? 3. Administrative. This measure investigates the community’s capabilities for carrying out the projects that would be required to implement each of the mitigation options. Specifically, the disaster managers will look at each option’s requirements in terms of: Chapter 4 ● ● ● Mitigation Staffing Funding Maintenance The community may be able to implement some options on their own, using their own resources, while other options will require (often significant) outside assistance. The questions disaster managers must answer include: ● ● ● Does the jurisdiction have the capability (staff, technical experts, and/or funding) to implement the action, and can it be readily obtained? Can the community provide the necessary maintenance work required to maintain the method of mitigation? Can the implementation project be accomplished in a timely manner, without excessive disruption to the community? 4. Political. Mitigation actions tend to be highly political. Like most other government actions, they tend to entail the spending of local funds and the use of local services, require permits and permissions, involve some alteration to the fabric of the community, may involve some use of public lands, and involve a certain amount of risk for the political leaders who authorize the actions. The political nature of each option will likewise be an influential decision-making factor when options are being chosen for implementation. Disaster managers will need to be aware of or will need to investigate how local, regional, and national political leaders feel about issues related to such agenda items as the environment, economic development, safety, and emergency management. Logically, actions that go against the current administration’s political ideology in any of these areas are likely to receive less support than those that are in line with its beliefs. It is not uncommon for proposed mitigation actions to fail because they lack this much-needed political support. Disaster managers can measure political support for their mitigation options by addressing the following questions: 203 ● ● ● ● ● ● ● Is there political support to implement and maintain this action? Have political leaders participated in the planning process so far? Is there a local champion willing to help see the action to completion? Who are the stakeholders in this proposed action, and how do they feel about the changes that will occur as a result of the action? Is there enough public support, toward which political leaders are likely to lean, to ensure the success of the action? Have all of the stakeholders been offered an opportunity to participate in the planning process? How can the mitigation objectives be accomplished at the lowest “cost” to the public? 5. Legal. Many mitigation options will require actions to be taken that need legal authority in order to be lawfully conducted. Disaster managers must determine whether they will be able to establish the legal authority at the national, provincial, state, or local levels to implement the proposed mitigation actions. It even may be necessary to propose the passage of new laws or regulations to accommodate the needs of the mitigation measure if such legal authority is weak or does not exist. However, this legal authority is best established long before the mitigation action is taken because of the exhaustive process of making or changing laws. Depending upon the country where the mitigation actions are being conducted, government entities at each structural level may operate under their own specific source of delegated authority. Local governments may operate under “enabling legislation” that gives them the power to engage in certain activities, or under informal governance systems based on tribal or other forms of law. Disaster managers will need to identify the unit of government that will ultimately have the authority to grant or deny the permission to undertake the actions necessary to implement the mitigation action. They will be well served to understand the interrelationships 204 Introduction to International Disaster Management between the various levels of government in order to better anticipate any political roadblocks or challenges that may arise. Much of this information can be obtained by asking: ● ● ● ● ● ● Does the government in question have the authority to grant permissions or permits for the work that is to be conducted? Is there a technical, scientific, or legal basis for the mitigation action (i.e., does the mitigation action “fit” the hazard setting?)? Are the proper laws, ordinances, and resolutions in place to implement the action? Are there any potential legal consequences? Will there by any issues of liability for the actions or support of actions, or lack of action, by any of the mitigation stakeholders? Is the action likely to be challenged by stakeholders who may be negatively affected? likely to be more willing to support a mitigation option if it can be funded, either in part or in whole, by some alternative (outside) source or sources. Disaster managers should ask the following questions when considering the economic aspects of mitigation options: ● ● ● ● ● ● 6. Economic. Like all community projects, mitigation options must prove to be cost-effective to the community before they are considered viable for implementation. The mitigation measures must be also be affordable to those who will be funding the project. Mitigation projects often require maintenance long after the project is completed, at the expense of the community where it is implemented. For this reason, affordability means many things, including being fundable without restructuring local budgets, fundable but with some budget restructuring required, fundable but requiring a special tax to be imposed, fundable but requiring external loans, and so on. Mitigation measures that are cost-free to the community or that can be financed within a current budget cycle are much more attractive to government officials who are making funding decisions than options that will require general obligation bonds or other forms of debt that will ultimately draw upon future community funds. Those communities that have very little money to support mitigation actions (a common condition) are Are there currently sources of funds that can be used to implement the action? What benefits will the action provide? Does the cost seem reasonable for the size of the problem and likely benefits? What financial burden will be placed on the tax base or local economy to implement or maintain this action? Will the result of the action negatively affect the economy in some secondary manner, such as reducing some form of income generation that was dependent upon the existence of the hazard? Does the action contribute to other community economic goals, such as capital improvements or economic development? 7. Environmental. Many mitigation measures affect the natural environment, either positively or negatively (and occasionally both positively and negatively to some degree). Disaster managers must consider these effects, as their actions could have long-term effects on the community and could negate any positive gains of the mitigation action. Of course, benefits to the environment often that arise from the implementation of a mitigation measure, which must be considered in the choosing of options. Floodplain buyout programs, for instance, which include acquisition and relocation of structures out of identified floodplains, help to restore the natural function of the floodplain. Vegetation management, which is often performed to control the wildfire hazard risk to humans and property, also provides the same protection to the environment. Questions that disaster managers should ask when considering the environmental factors associated with particular mitigation options include: Chapter 4 ● ● ● Mitigation How will this action affect the environment (including land, water, and air resources and endangered species)? Will this action comply with environmental laws and regulations? Is the action consistent with the community’s environmental values and goals? EMERGENCY RESPONSE CAPACITY AS A RISK MITIGATION MEASURE Development of a nation’s emergency response capacity is often cited as one of the most important mitigation measures that can be taken. The ability of emergency and disaster response mechanisms to manage a disastrous event and prevent further injuries, fatalities, and destruction of property and the environment will play a large part in determining that community’s or country’s vulnerability. To be truly effective, emergency capabilities must be tailored to the risks of the community. Though they are primarily designed to handle the routine emergencies experienced by the community, the region, or the country, these resources can be developed so they can manage large-scale events as well. In general, emergency and disaster management systems will minimally include: ● ● ● Fire department resources Law enforcement resources Public health infrastructure (clinics, hospitals, ambulances, etc.) Additional resources that help to specialize emergency management and ensure that the community or country is prepared for major disasters include, but are not limited to: ● ● ● ● ● Search-and-rescue teams (wilderness and urban) Hazardous materials teams Special weapons and tactics teams Emergency management specialists or departments Disaster medical and mortuary teams 205 ● ● ● ● ● Debris management teams Mass casualty management teams Infrastructure repair resources Communications coordinators Volunteer management teams Developing an emergency management capacity also involves taking several important actions. These may involve: ● ● ● ● Creation of comprehensive emergency response plans for the range of known hazards that exist, detailing responsibilities, operational tasks, leadership roles, and administrative issues (such as what agency pays for what actions, and what reimbursement will occur) Establishment of statutory authority for response and recovery Creation of mutual aid agreements within countries (between communities) and around international regions, to formalize assistance before disasters strike Development of a full training and exercise regimen Preparedness and response actions and resources will be described in much greater detail in Chapters 5 and 6, while the components of an emergency response capacity will be described in Chapter 8. INCORPORATING MITIGATION INTO DEVELOPMENT AND RELIEF PROJECTS More and more each year, especially as a result of the United Nations’ efforts during the International Decade for Natural Disaster Reduction and the International Strategy for Disaster Reduction, mitigation is recognized as an essential component of all preand postdisaster development projects. Development workers, be they national, international, or other, must be aware of the hazard risks that exist where they are developing and must incorporate those risks into their project designs (see Exhibit 4-4). 206 Introduction to International Disaster Management EXHIBIT 4-4 Organization of American States: “Decision Criteria with Limited Information” Unfortunately, even with the current efforts to map worldwide risk, there are situations where projects must go ahead with little or no information on risk. The Organization of American States, which is heavily involved in development and reconstruction in Latin America, has designated four available options to accommodate such situations when international funding is involved: Cut-off period. This is the crudest procedure for incorporating natural hazard risk into economic analysis. For the most part, it is used by private investment agencies with a primary interest in capital return. To be economically feasible under the cut-off-period method, a project must accrue benefits that exceed its cost in relatively few years. For very risky projects, such as those at high risk of flooding or landslides, the cut-off period might be set as low as two or three years. The logic of the cut-off-period rule is that, because costs and benefits are uncertain beyond the cut-off date, they should be ignored when determining project feasibility. To determine the length of the cut-off period, a rough idea of the riskiness of the project should be sought during the pre-feasibility analysis. The method is appropriate when three conditions are present: (1) few records concerning natural hazard risk are available, (2) the likely hazards are of fast rather than slow onset, and (3) the magnitude of potential disasters is great. Discount rate adjustment. Adding a risk premium to the discount rate is another ad hoc way to reflect uncertainty in project analysis. A variation is to add a premium to the discount rate for the benefits accruing to the project as a result of mitigation, and to subtract a premium for the costs, a procedure consistent with the fact that hazards decrease benefits and increase costs. Introducing these premiums into feasibility calculations has the effect of giving less weight to increasingly uncertain future costs and benefits. This is consistent with the conventional expectation that an investor will require higher rates of return for riskier investments. The analyst using this method must determine an arbitrary risk premium to add to the discount rate. The same kind of hazard information used for the cutoff method is applicable here, and the method is applicable to both slow- and rapid-onset hazards. Again, this information should be available by the pre-feasibility stage of planning. Game-theory approaches. Two strategies from game theory are applicable to introducing risk assessment into the economic appraisal of projects: the “maximin-gain” and the “minimax-regret.” Both can be applied at the earliest stages of project formulation, as the necessary minimum information on historical hazardous events and damage becomes available. From this information, it is possible to estimate the comparative benefits of equivalent project alternatives, given varying severities of a hazardous event. The game-theory approaches are best suited to short-term, high-impact hazards for which most-least-damage scenarios can be produced. Given the possible net benefits accrued under different hazard conditions, the maximin-gain approach seeks the project alternative that will give the highest net return in the worst-case scenario; the selection of a particular project alternative is based entirely on security and is thus very conservative. Minimax-regret takes a different approach by considering the sum of the losses that each project alternative might incur given the probabilities of hazardous events occurring. The alternative with the smallest sum of possible losses when all scenarios are considered is the one that would be selected. Chapter 4 Mitigation Sensitivity analysis. Using this method, an analyst tests the effect of changes in the values of key project parameters (e.g., halving the income from admission fees or doubling the maintenance cost) on net costs and benefits. To assess the impact of natural hazards, values are changed according to previous hazard information, damage reports, etc., so that the effects of a possible natural event on the Of course, mitigation is costly, and for this reason its incorporation may be resisted. However, through education, regulation, and enforcement, it is easy to teach these officials that it may not be worth spending the money on the project in the first place if there is little chance the structure or system is unlikely to survive a disaster in the near or even distant future. This is especially true for projects that involve large amounts of national or foreign debt, because the debt will still exist even if the structure has been destroyed. Resilience is one of the fundamental bases of sustainable development. The World Bank has begun to embrace this philosophy and has created the Disaster Management Facility to assess risks around the world and incorporate their findings into consideration for development projects. They are gradually gaining a greater awareness of site-specific risks that exist in many countries of the world, especially poor countries, where risk assessments were nonexistent, inaccurate, or severely out of date. With this tool in hand, they can more accurately assess large development projects, such as schools, hospitals, or other components of infrastructure, and determine if the project design accounts for the hazard risks with which the new structure will need to contend. It is in the best interest of both the lender and the borrower to take such actions, because both will ultimately suffer in the event of a disaster that results in loss of the structure or project. 207 economic feasibility of the project can be quantified. With this type of analysis, it is possible to determine how much a key parameter can change before the project becomes economically unfeasible. The analysis can also be used to test the effect of mitigation measures. Source: OAS, 1991. Finally, mitigation must be incorporated into relief projects. It has often been said that disasters are opportunities in disguise. Despite the death, suffering, and destruction, the event allows for a fresh start, and with proper planning, the society that is rebuilt can be made resilient to the hazard that brought about its previous destruction. There are conflicting goals in the aftermath of disasters—the goal to rebuild as quickly as possible, and the goal to rebuild as strongly as possible. It is vital that relief efforts fully assess the future risks of the region, based upon the new information gained in the aftermath of the disaster, and incorporate all of those findings into any relief and reconstruction project. For the structures that are left standing, this information may be used to retrofit, relocate, or perform other mitigation measures as listed above. Finally, the opportunity to fine-tune both public education efforts and response capabilities may be gained in this period as well. CONCLUSION Mitigation traditionally has been perceived as a luxury of the wealthy nations. Yet, through unilateral, multilateral, and nonprofit financial and technical assistance, many of the poorer nations of the world are beginning to not only recognize mitigation’s benefits but to benefit from its practice as well. 190 Introduction to International Disaster Management ● FIGURE 4-9 Incidence of dengue fever (in red) showing 1970 levels during a mosquito eradication campaign, and 1997 levels, many years after the eradication campaign was stopped. (Source: US Centers for Disease Control.) ● Behavioral Modification Through collective action, a community can alter the behavior of individuals; resulting in some common risk reduction benefit. Voluntary behavior modification measures are more difficult to implement than the regulatory measures listed above, because they usually involve some form of sacrifice. However, through effective public education, behavioral modification is possible. Tax incentives, or subsidies, can help to increase the success of behavioral modification practices. Examples of mitigation measures that involve behavioral modification include: ● Rationing. Rationing is often performed prior to and during periods of drought. Because it can be very difficult for governments to limit vital services such as water to citizens, it is up to citizens to limit their individual usage. Electricity rationing is also performed during periods of extreme heat or cold to ensure that electrical climate control systems are able to perform as required. ● Environmental conservation. Many practices, in both urban and rural areas, are very destructive to the environment. Once the environmental feature—be it a body of water, a forest, or a hillside—is destroyed, secondary hazardous consequences may appear that could have been avoided. Through proper education and the offering of alternatives, destructive practices can be halted before too much damage is done. Examples of environmental conservation include environmentally friendly farming practices, wood harvesting that does not cause deforestation, and protecting coral reefs from dynamite fishing and other fishing practices. Tax incentives, subsidies, and other financial rewards for safe practices. Individuals and businesses can be coaxed into safer practices that reduce overall risk through financial incentives. Examples of schemes that use financial incentives include lower insurance premiums, housing buyout programs to move out of high-risk areas, farm subsidies for allowing land to be used for flood control during emergencies, and environmentally friendly farming practices (no deforestation, responsible grazing practices, flexible farming and cropping). Strengthening of social ties. When a community strengthens its social ties, it is more likely to withstand a hazard’s stresses. For many reasons, the largest of which is urbanization, these ties break and are not replaced. In Chicago in 1995, a heat wave caused the death of 739 people. It was later determined that weak social structures were primarily to blame for the deaths, which could have been prevented had friends, family, or neighbors checked on the victims. RISK TRANSFER, SHARING, AND SPREADING Risk transfer, sharing, and spreading are often considered mitigation measures, though they do Chapter 4 Mitigation absolutely nothing to reduce actual disaster consequences or reduce hazard likelihood. The concept behind them is that the financial disaster consequences that do occur are shared by a large group of people, rather than the entire burden falling only on the affected individuals. The result is a calculated average consequence cost, such as an insurance premium. Insurance, which is the most common mitigation measure in this category, is defined as: “A promise of compensation for specific potential future losses in exchange for a periodic payment” (InvestorWords. com, 2003). Insurance is a mechanism by which the financial well-being of an individual, company, or other entity is protected against an incidence of unexpected loss. Insurance can be mandatory (required by law) or optional. Insurance operates through the use of premiums, or payments determined by the insurer. In exchange for premiums, the insurer agrees to pay the policyholder a sum of money (up to an established maximum amount) upon the occurrence of a specifically defined disastrous event. The majority of insurance policies include a deductible, which can be a fixed amount per loss (e.g., the first $1000 of a loss), a percentage of the loss (5% of the total loss), or a combination. The insurer pays the remaining amount, up to the limits established in the original contract. In general, the lower (smaller) the deductible associated with a policy, the higher the premiums. Common examples of insurance include automobile insurance, health insurance, disability insurance, life insurance, flood insurance, earthquake insurance, terrorism insurance, and business insurance. Insurance allows losses to be shared across wide populations. To briefly summarize, insurance works as follows. An auto insurer (for example) takes into account all of the policyholders it will be insuring. It then estimates the cost of compensating policyholders for all accidents expected to occur during the time period established in the premiums (usually six months to a year.) The company then divides that cost, adding its administrative costs, across all policyholders. The premiums can be further calculated using 191 information that gives more specific definitions of risk to certain individuals. For example, if one policyholder has 10 moving violations (speeding tickets) in a period of 10 years and has been found at fault in five accidents during the same period, that policyholder is statistically a greater risk to the insurer than someone who has never had an accident or moving violation. It follows, then, that the first policyholder would be expected to pay a higher premium for equal coverage. Insurance companies make the majority of their profits through investing the premiums collected. To cover losses in case the severity of accidents or disasters is greater than estimated when the policies were created, insurance companies rely on the services of reinsurance companies. Reinsurance companies insure insurance companies, and tend to be internationally based to allow the risk to be spread across even greater geographical ranges. Insurance industry researchers Howard Kunreuther and Paul Freemen investigated the insurability of risks, especially those associated with disastrous consequence. They found that two conditions must be satisfied for a risk to be insurable. First, the hazard in question must be identifiable and quantifiable. In other words, the likelihood and consequence factors must be well understood before an insurer can responsibly and accurately set insurance premiums such that they will be able to adequately compensate customers in the event of a disaster. Second, insurers must be able to set premiums for “each potential customer or class of customers” (Kunreuther and Freement, 1997). Common hazards, such as house fires and storm damage, have a wealth of information available upon which insurers may calculate their premiums. For catastrophic but rare events, such as earthquakes, it can be difficult or impossible to estimate with any degree of precision how often events will occur and what damages would result (see Exhibit 4-2). In the wealthier nations of the world, most property owners and renters have some form of insurance that protects the structure itself, the contents of the 192 Introduction to International Disaster Management EXHIBIT 4-2 Findings of the ProVention Consortium International Conference on the Potential of Insurance for Disaster Risk Management in Developing Countries: Challenges Lack of information needed for underwriting. Many developing countries lack the data and information needed for sound underwriting and product development. The quality and availability of data may vary, such that in a capital city some information may be available, while in rural areas information may be held only locally and in forms that are not easily understood by noncommunity individuals. Insurance services require information about potential losses and client demand, including data on assets at risk and the vulnerability and hazard exposure of those assets. Lack of local insurance expertise. In countries where insurance is not common, there is often a distinct lack of local expertise, ranging from actuarial science, underwriting, and risk assessment to claims management and client support. Lack of awareness and understanding of insurance. It takes time to develop awareness among potential clients about the benefits and costs of insurance, whether the clients are national or local governments, community groups, or lowincome individuals. Awareness is important not only for demand development and sales; but also because the design of insurance products should be based on client needs. Potential clients need an awareness of basic insurance principles and how these tools could help them before they can articulate their needs and thus generate demand. High opportunity cost of premiums for the poor. It is often asked if insurance is truly a viable option for the very poor, because premiums are not productive (unless a claim is made), and other needs may be more pressing. Paying premiums will generally not be a priority for a poor household if doing so would require foregoing essentials. Lack of legal structure and financial services infrastructure. Many developing countries lack the regulatory framework that makes insurance pro- vision possible. Some micro-insurance services are provided in semi-legal ways because the legal environment in host countries does not allow formal insurance. Community groups may be able to aggregate business and overcome moral hazard, adverse selection, and data needs, but formal insurance providers may not be legally allowed to offer services to these groups. Some developing countries’ legal systems are developing towards market economy standards, but may not yet be mature enough to link with the international capital markets. Also, many developing countries lack the infrastructure to provide insurance services. Inadequate technological infrastructure such as communications may hinder insurance services and claims management. Lack of a culture of risk reduction and mitigation. Insurance functions on the assumption that the underlying risk is reduced as much as possible, with insurance thus mitigating against the remaining unpreventable and unpredictable events (“residual risk”). Many developing countries lack a culture of predisaster risk reduction, or resources and incentives for action are often inadequate. Without a culture of risk reduction and insurance as forms of mitigation, establishing successful insurance will be challenging. Partner differences in vocabulary, organizational operations, and timelines. Partners in different schemes that provide insurance services might include any mix of national and local governments, NGOs, civil society and the poor, commercial enterprises, and international organizations. Each potential partner may operate with different vocabularies, goals, and methods, and along different timelines. Different operational structures can also be a challenge: While national governments may need to run decisions through complex and time-consuming democratic decision-making Chapter 4 Mitigation processes, commercial entities need to make decisions based on profitability and other strategic concerns. There is the example of a partnership that fell apart when the involved national government could not provide insurance and reinsurance partners with necessary data by a certain deadline, even though products had been developed and the partnership was ready to move forward. Need to define partner roles clearly. The word “partnership” among international organizations and national governments often signifies a broad willingness to engage in discussions, while in business the term often implies contractual obligations. Further to such basic differences of understanding and interpretation, there are examples of a national government establishing a pattern of “bailing out” disaster victims following earthquakes, thus creating a disincentive to purchase insurance from a scheme that the government itself supported as mandatory. International organizations have at structure, or both (see Figure 4-10). However, for the reasons listed above, this coverage is often limited to common events, with specific preclusions against more unlikely natural and technological disasters. These special disasters require the purchase of policies formulated to assume the specific risk for each causative hazard. General homeowner and renter policies cover losses that commonly occur and are not catastrophic in nature, such as fires, wind damage, theft, and plumbing damage. Catastrophic hazards, like earthquakes, landslides, and floods, are often precluded because of the wide spatial damage they inflict. Hazard damages that affect a wide spatial territory present a special problem for insurance companies because of the mechanisms by which insurance functions. For example, in the event of a fire or theft in a single home, the cost of the damages or losses would be easily absorbed by the premiums of the unaffected policyholders. However, in the case of an 193 times acted as reinsurers for client countries, which in many cases is inappropriate. Roles and agreements must be examined carefully and adjusted so that there is no confusion and detraction of the opportunities and responsibilities of each partner. Lack of national stability and thus insurance industry confidence. Developing countries may lack the stability in government, regulatory framework, and economy that is required for the provision of sustainable insurance services. Constantly changing governments and regulatory frameworks make it difficult for the insurance industry to establish itself and develop a viable market. Unstable macroeconomies can affect the ability of potential clients to pay premiums over a long period of time. The insurance industry is aware of these risks and commensurately wary of doing business under such conditions. Source: ProVention Consortium, 2004. earthquake, a large number of people will be affected, resulting in a sum total much greater than their collective premiums, such that the total funds collected from the premiums will be less than the capital required to pay for damages. The bankruptcy of insurance companies due to catastrophic losses has been prevalent throughout the history of the insurance industry. Policies for specific catastrophic hazards can often be purchased separately from basic homeowners or renters insurance policies or as riders to them. However, these entail specific problems that deserve mentioning. In general, only those people who are likely to suffer the specific loss defined in the policy are likely to purchase that type of policy, creating the need for much higher premiums than if the specific hazard policy were spread across a more general population. This phenomenon, called “adverse selection,” has made the business of hazard insurance undesirable to many insurance companies. 194 Introduction to International Disaster Management FIGURE 4-10 Worldwide insurance coverage. (Source: MunichRe, 2004, Munich.) Several methods have been adopted to address the problems associated with adverse selection. Examples include: ● ● The inclusion of these disasters in basic/comprehensive homeowners and renters policies, regardless of exposure or vulnerability. This spreads out the risk across the entire population of policyholders in the country, regardless of differential risk between individuals. Additionally, controls are placed upon the minimum spatial zones within which each company can provide policies to ensure that the ratio of policies affected by a disaster to those unaffected are kept as low as possible. The introduction of government backing on insurance coverage of catastrophic events. In ● this scenario, the insurers are liable for paying for damages up to an established point, beyond which the government supplements the payments. Terrorism insurance, as discussed later in this section, is an example of government backing on insurance coverage of catastrophic events. Heavier reliance on international reinsurance companies. Buying reinsurance can spread the local risk to wider areas of coverage, thereby reducing the chance that annual claims exceed collected premiums. Unfortunately, many companies are unable to purchase all the reinsurance that they would like to have. Additionally, because many of these policies require the insurers to pay a percentage of total claims placed, the amount they ultimately pay in catastrophic disasters can be massive despite reinsurance coverage. Chapter 4 Mitigation Several advantages gained through the use of insurance have been identified, including: 1. Victims are guaranteed a secure and predictable amount of compensation for their losses. With this coverage, they do not have to rely on disaster relief, and reliance on government assistance is reduced as well. 2. Insurance allows for losses to be distributed in an equitable fashion, protecting many for only a fraction of the cost each would have incurred individually if exposed to hazards. This can help the economy overall by reducing bankruptcies, reducing reliance on federal government assistance, and increasing the security of small businesses and individuals, often the most severely affected victims of disaster. 3. Insurance can actually reduce hazard impact by encouraging policyholders to adopt certain required mitigation measures. As policyholders reduce their vulnerability to risk, their premiums fall. The owners of automobiles that have airbags, antitheft devices, and passive restraint devices, for instance, will receive a discount on their premiums. Homeowners who develop outside of the floodplain or who install fire suppression systems will also receive these benefits. Additionally, this gives financial/economic disincentives for people or businesses to build in areas that are exposed to hazards. Limitations on hazard insurance exist as well, and include the following issues: 1. Insurance may be impossible to purchase in the highest-risk areas if the private insurance companies decide that their risk is too high. This is especially true for hazards like landslides that affect a very specific segment of the population. 2. Participation in insurance plans is voluntary. Although private insurance companies can earn a profit despite overall low participation, benefits in terms of mitigation value become limited by low participation. Furthermore, it is not uncommon for homeowners and renters to save 195 money by purchasing policies that cover less than is needed for catastrophic losses, which increases their potential (though reduced) reliance on government relief. 3. Participation in insurance has been known to encourage people to act more irresponsibly than they may act without such coverage. For instance, if a person knows that his furniture is likely to be replaced if it is damaged in a flood, he is less likely to move that furniture out of harm’s way (such as moving it to a second floor of his home) during the warning phase of the disaster. This phenomenon is termed the “moral hazard.” In the long run, this causes damage payouts to increase and, as a result, premiums to increase as well. 4. Many insurance companies are pulling out of specific disaster insurance plans because the probability that they will not be able to cover catastrophic losses is too great. Before 1988, there had never been a single disaster event for which the insurance industry as a whole needed to pay over $1 billion in claims. Since that time, there have been over 20 events for which claims have exceeded that threshold (see Table 4-1). Hurricane Andrew required $15.5 billion in compensation, and estimates for insured losses in the September 11th terrorist attacks have been as high as $40 billion (International Insurance Society, 2003). 5. Catastrophic losses that cover a wide but specific geographic space within a country may result in inequitable premium increases if coverage areas are too general. For instance, the Northridge, California earthquake cost insurers more than $12 billion in claims, but only $1 billion in premiums had been collected in the entire state of California. Therefore, the payment for this event and, likewise, the required increase in premiums were “subsidized” by other states that were not affected and were not at such high risk (Mileti, 1999). Insurance has been denied status as a true mitigation measure by many experts because it is seen as 196 Introduction to International Disaster Management TABLE 4-1 The 10 Most Costly World Insurance Losses, 1970–2004 Rank Insured loss in 2004 U.S. dollars (millions)b Date Country Event 1 Aug. 23, 1992 United States, Bahamas Hurricane Andrew 2 Sept. 11, 2001 United States Terrorist attack 20,035 3 Jan. 17, 1994 United States Northridge earthquake (magnitude 6.6) 17,843 4 Sept. 2, 2004 United States, Caribbean: Barbados, etc. Hurricane Ivan; damage to oil rigs 11,000 5 Aug. 11, 2004 United States, Caribbean: Cuba, Jamaica, etc. Hurricane Charley 8,000 6 Sept. 27, 1991 Japan Typhoon Mireille 7,831 7 Jan. 25, 1990 Europe: France, United Kingdom, etc. Winter storm Daria 6,639 8 Dec. 25, 1999 Europe: France, Switzerland, etc. Winter storm Lothar 6,578 $21,542 9 Sept. 15, 1989 Puerto Rico, United States, etc. Hurricane Hugo 6,393 10 Aug. 26, 2004 United States, Bahamas Hurricane Frances 5,000 a Property and business interruption losses, excluding life and liability losses. Adjusted to 2004 dollars by Swiss Re. c Note that, while final figures for the insurance losses for Hurricane Katrina (August, 2005) have not yet been tallied, industry estimates place the final cost at between $30 and $40 billion, thereby ensuring its status as the greatest insurance loss from a single event. b Source: Swiss Re, sigma, No. 1/2005. Insured losses for natural catastrophes in the United States and the Sept. 11 terrorist attack from ISO. redistributing losses rather than actually eliminating exposure to the hazard (which would effectively limit absolute losses). This is a widely debatable issue, which requires many assumptions. For instance, one must assume that an individual has the ability to move out of a risky situation or has other options that present less risk before stating that the mere presence of insurance encourages him to live in the riskier situation. One also must assume that we would be able to limit all losses, or that we could reach consensus as a society about which hazard risk should be considered insurable and at which level of risk insurance should be limited or prevented. The International Insurance Institute maintains profiles on the insurance industry in most countries of the world, accessible at: www.internationalinsurance.org/international/toc/ The United States has a nationally managed insurance program designed to insure against the risk of flood hazards. Exhibit 4-3 describes this program in detail. EXHIBIT 4-3 The U.S. National Flood Insurance Program History of the Program Up until 1968, federal actions related to flooding were primarily responses to significant events that resulted in using structural measures to control flooding. Major riverine flood disasters of the 1920s and 1930s led to considerable federal involvement in protecting life and property from flooding through the use of structural flood-control projects, such as dams and levees, with the passage of the Flood Control Act of 1936. Generally, the only available financial recourse to assist flood victims was in the form of disaster assistance. Despite the billions of dollars in federal investments in struc- Chapter 4 Mitigation tural flood-control projects, the losses to life and property and the amount of assistance to disaster victims from floods continued to increase. As early as the 1950s, when the feasibility of providing flood insurance was first proposed, it became clear that private insurance companies could not profitably provide such coverage at an affordable price, primarily because of the catastrophic nature of flooding and the inability to develop an actuarial rate structure that could adequately reflect the risk to which flood-prone properties are exposed. The U.S. Congress proposed an experimental program designed to demonstrate the feasibility of the private sector providing flood insurance by enacting the Federal Insurance Act of 1956, but this Act was never implemented. In recognition of increasing flood losses and disaster relief costs, major steps were taken in the 1960s to redefine federal policy and approaches to flood control. In 1965, Congress passed the Southeast Hurricane Disaster Relief Act. The Act was as a result of the extensive damage caused by Hurricane Betsy in the Gulf states. The Act provided financial relief for the flooding victims and authorized a feasibility study of a national flood insurance program. The resulting report was entitled “Insurance and Other Programs for Financial Assistance to Flood Victims.” Shortly thereafter, the Bureau of the Budget Task Force on Federal Flood Control in 1966 advocated a broader perspective on flood control within the context of floodplain development in House Document 465, “A Unified National Program for Managing Flood Losses.” House Document 465 included five major goals: 1. Improve basic knowledge about flood hazards 2. Coordinate and plan new developments in the floodplain 3. Provide technical services 4. Move toward a practical national program of flood insurance 197 5. Adjust federal flood control policy to sound criteria and changing needs The National Flood Insurance Act of 1968 Congressional Document 465 and the prior feasibility study provided the basis for the National Flood Insurance Act of 1968. The primary purposes of the 1968 Act creating the NFIP are to: 1. Better indemnify individuals for flood losses through insurance 2. Reduce future flood damages through state and community floodplain management regulations 3. Reduce federal expenditures for disaster assistance and flood control Section 1315 of the 1968 Act is a key provision that prohibits FEMA from providing flood insurance unless the community adopts and enforces floodplain management regulations that meet or exceed the floodplain management criteria established in accordance with Section 1361(c) of the Act. These floodplain management criteria are contained in 44 Code of Federal Regulations (CFR) Part 60, Criteria for Land Management and Use. The emphasis of the NFIP floodplain management requirements is directed toward reducing threats to lives and the potential for damages to property in flood-prone areas. Over 19,700 communities presently participate in the NFIP. These include nearly all communities with significant flood hazards. In addition to providing flood insurance and reducing flood damages through floodplain management regulations, the NFIP identifies and maps the nation’s floodplains. Mapping flood hazards creates broad-based awareness of the flood hazards and provides the data needed for floodplain management programs and to actuarially rate new construction for flood insurance. When the NFIP was created, the U.S. Congress recognized that insurance for “existing buildings” 198 constructed before a community joined the program would be prohibitively expensive if the premiums were not subsidized by the federal government. Congress also recognized that individuals who did not have sufficient knowledge of the flood hazard to make informed decisions built most of these floodprone buildings. Under the NFIP, “existing buildings” are generally referred to as Pre-FIRM (Flood Insurance Rate Map) buildings. These buildings were built before the flood risk was known and identified on the community’s FIRM. Currently about 26% of the 4.3 million NFIP policies in force are Pre-FIRM subsidized, compared to 70% of the policies being subsidized in 1978. In exchange for the availability of subsidized insurance for existing buildings, communities are required to protect new construction and substantially improved structures through adoption and enforcement of community floodplain management ordinances. The 1968 Act requires that full actuarial rates reflecting the complete flood risk be charged on all buildings constructed or substantially improved on or after the effective date of the initial FIRM for the community or after December 31, 1974, whichever is later. These buildings are generally referred to as “Post-FIRM” buildings. Early in the program’s history, the federal government found that providing subsidized flood insurance for existing buildings was not a sufficient incentive for communities to voluntarily join the NFIP or for individuals to purchase flood insurance. Tropical Storm Agnes in 1972, which caused extensive riverine flooding along the East Coast, proved that few property owners in identified floodplains were insured. This storm cost the nation more in disaster assistance than any previous disaster. For the nation as a whole, only a few thousand communities participated in the NFIP and only 95,000 policies were in force. As a result, Congress passed the Flood Disaster Protection Act of 1973. The 1973 Act prohibits federal agencies from providing financial assistance Introduction to International Disaster Management for acquisition or construction of buildings and certain disaster assistance in the floodplains in any community that did not participate in the NFIP by July 1,1975, or within one year of being identified as flood-prone. Additionally, the 1973 Act required that federal agencies and federally insured or regulated lenders had to require flood insurance on all grants and loans for acquisition or construction of buildings in designated Special Flood Hazard Areas (SFHAs) in communities that participate in the NFIP. This requirement is referred to as the Mandatory Flood Insurance Purchase Requirement. The SFHA is that land within the floodplain of a community subject to a 1% or greater chance of flooding in any given year, commonly referred to as the 100-year flood. The Mandatory Flood Insurance Purchase Requirement, in particular, resulted in a dramatic increase in the number of communities that joined the NFIP in subsequent years. In 1973, just over 2200 communities participated in the NFIP. Within four years, approximately 15,000 communities had joined the program. It also resulted in a dramatic increase in the number of flood insurance policies in force. In 1977, approximately 1.2 million flood insurance policies were in force, an increase of almost 900,000 over the number of policies in force in December of 1973. The authors of the original study of the NFIP thought that the passage of time, natural forces, and more stringent floodplain management requirements and building codes would gradually eliminate the number of Pre-FIRM structures. Nevertheless, modern construction techniques have extended the useful life of these Pre-FIRM buildings beyond what was originally expected. However, their numbers overall continue to decrease. The decrease in the number of Pre-FIRM buildings has been attributed to a number of factors, such as severe floods in which buildings were destroyed or substantially damaged, redevelopment, natural Chapter 4 Mitigation attrition, acquisition of flood damaged structures, as well as flood control projects. In 1994, Congress amended the 1968 Act and the 1973 Act with the National Flood Insurance Reform Act (NFIRA). The 1994 Act included measures, among others, to: ● ● ● ● ● ● Increase compliance by mortgage lenders with the mandatory purchase requirement and improve coverage Increase the amount of flood insurance coverage that can be purchased Provide flood insurance coverage for the cost of complying with floodplain management regulations by individual property owners (Increased Cost of Compliance coverage) Establish a Flood Mitigation Assistance grant program to assist states and communities to develop mitigation plans and implement measures to reduce future flood damages to structures Codify the NFIP’s Community Rating System Require FEMA to assess its flood hazard map inventory at least once every five years Funding for the NFIP is through the National Flood Insurance Fund, which was established in the Treasury by the 1968 Act. Premiums collected are deposited into the fund, and losses and operating Risk-Sharing Pools Claire Reiss of the Public Entity Risk Institute and author of Risk Identification and Analysis: A Guide for Small Public Entities describes an alternative for local governments and other small public entities that are considering purchasing insurance: risk-sharing pools. Reiss writes: A public entity that is considering purchasing traditional insurance may also consider public risk-sharing pools. These are associations of public entities with similar functions that have banded together to share risks by creating their own insurance vehicles. Pools sometimes structure 199 and administrative costs are paid out of the fund. In addition, the program has the authority to borrow up to $1.5 billion from the Treasury, which must be repaid along with interest. Until 1986, federal salaries and program expenses, as well as the costs associated with flood hazard mapping and floodplain management, were paid by an annual appropriation from Congress. From 1987 to 1990, Congress required the program to pay these expenses out of premium dollars. When expressed in current dollars, $485 million of policyholder premiums were transferred to pay salary and other expenses of the program. Beginning in 1991, a Federal policy fee of $25, which was increased to $30 in 1995, is applied to most policies in order to generate the funds for salaries, expenses, and mitigation costs. The program currently has three basic components: 1. Identifying and mapping flood-prone communities 2. Enforcing the requirement that communities adopt and enforce floodplain management regulations 3. The provision of flood insurance Source: FEMA and FIMA, 2002. themselves or their programs as group insurance purchase arrangements, through which individual members benefit from the group’s collective purchasing power. Members pay premiums, which (1) fund the administrative costs of operating the pool, including claims management expenses and (2) pay members’ covered losses. Pools can provide significant advantages to their members. For example, they offer insurance that is specific to public entities at premiums that are generally stable and affordable. Many pools also offer additional benefits and services at little or no extra charge, including advice on safety and risk management; seminars on loss control; updates on changes in the insurance industry; and property appraisal and inspection. Some pools offer members the opportunity to receive dividends for maintaining a good loss record. Chapter 4 Mitigation 179 either way, and may appear as one form in this text and another form elsewhere. These two categories are described in detail below. STRUCTURAL MITIGATION Structural mitigation measures are those that involve or dictate the necessity for some form of construction, engineering, or other mechanical changes or improvements aimed at reducing hazard risk likelihood or consequence. They often are considered attempts at “man controlling nature” when applied to natural disasters. Structural measures are generally expensive and include a full range of regulation, compliance, enforcement, inspection, maintenance, and renewal issues. Though each hazard has a unique set of structural mitigation measures that may be applied to its risk, these measures may be grouped across some general categories. Each category will be described below, with examples of how the mitigation type would be applied to one or more individual hazard types. The general structural mitigation groups to be described are: ● ● ● ● ● ● ● ● ● ● Resistant construction Building codes and regulatory measures Relocation Structural modification Construction of community shelters Construction of barrier, deflection, or retention systems Detection systems Physical modification Treatment systems Redundancy in life safety infrastructure Resistant Construction Clearly, the best way to maximize the chance that a structure is able to resist the forces inflicted by various hazards is to ensure that it is designed in such a way prior to construction to do just that. Through aware- FIGURE 4-1 House built on stilts above annual flood levels in Guayas Province, Ecuador. (Source: Author.) ness and education, individual, corporate, and government entities can be informed of the hazards that exist and the measures that can be taken to mitigate the risks of those hazards, allowing resistant construction to be considered. As a mitigation option, designing hazard resistance into the structure from the start is the most cost-effective option and the option most likely to succeed. Of course, whether builders choose to use hazardresistant design depends upon whether they have access to the financial resources, the technical expertise necessary to correctly engineer the construction, and the material resources required for such measures. Where cultures have adapted to living with a hazard, construction styles may incorporate hazardresistant design. This is often seen in areas with annual flooding, where houses are built on stilts (see Figure 4-1). An example of a culturally adjusted hazard-resistant construction style is the houses built by the Banni in India (discussed in Chapter 3), which resist the shaking of earthquakes. Little funding...
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