Strengthening the Disaster Resilience of the Academic Biomedical Research Community Protecting the Nation's Investment (2017) / Chapter Skim
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9 Funding a Resilient Mission
9 Funding a Resilient Mission
Pages 295-328
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9 Funding a Resilient Mission FIGURE 9-1 Destroyed fume hood as a result of 2011 Great Tohoku Japan Earthquake. SOURCE: Kemsley, 2011.
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Following a disaster, cash and other immediate funding sources must be made available for equipment, supplies, and the building contractors, consulting engineers and other design professionals, vendors, and institutional staff who need to be paid. The participation of institutional finance leaders and finance specialists in pre-disaster resilience planning and in post-disaster recovery actions is important.
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As part of this process, the PI may also need to confirm that the research grant will allow data protection and preservation costs to be considered as a normal business expenditure funded from grant direct costs. In addition to the PI's substantive engagement and leadership with business continuity planning for the individual laboratory, there may be significant value for the individual PI to made personal preparations predisaster.
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. RESEARCH DEPARTMENT CONSIDERATIONS Pre-Disaster Financial Considerations Due to the general administrative support structure that a department may be able to provide to a PI, a research core, or a research center, the research department may be most effective in facilitating the integration of departmental business continuity and institutional disaster resilience planning with institutional operating and capital budget planning processes.
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for regular inclusion in annual institutional operating and capital budget plans. Integrated disaster resilience planning and business continuity planning have the opportunity to make the financial case for specific departmental capital improvements that will mitigate or eliminate negative impacts, including recovery time frames, following disasters within individual (and often unique)
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. Post-Disaster Financial Considerations While there has been much research on how to create effective decision structures to improve disaster response management performance, postdisaster financial considerations have focused, at least initially, on how best to match financial resources with the specific activities and time lines for recovery either already identified within the departmental plans developed pre-disaster or in response to a more ad hoc institutional financial resource needs assessment and allocation process (Rolland et al., 2010)
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• Implementation of arrangements for alternative space and access to offsite backup data sources. Post-disaster, the key financial considerations for a department include providing assurances to research faculty and staff that they will continue to be compensated during the recovery effort and providing institutional financial officers the specific documentation that may be required by the Federal Emergency Management Agency (FEMA)
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The experience of New York University's Langone Medical Center (NYU Langone) following major devastation to its academic biomedical research enterprise caused by Hurricane Sandy suggests the need for imme diate and frequent engagement with peer academic research institutions, senior FEMA officials, and other senior federal, state, and local government officials in developing reimbursement protocols -- including early and expedited audits of early submitted reimbursement requests -- as a means of testing the efficiency of the institution's proposed reimbursement process (Martin, 2016)
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Supplemental insurance for specific equipment should be considered (as recommended in the University of North Carolina at Chapel Hill's Guide to Business Continuity and Recovery Planning on Campus) , and business interruption insurance can protect against potential lost earnings (UNC, 2009)
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• Institutional leaders can adopt consistent long-range, comprehensive, and integrated capital planning processes that will support business continuity, ensure that all other research enterprise performance outcomes are achieved, and guarantee that an institution's limited capital funding is carefully invested to maximize targeted outcomes. • Large and small capital investments that support enhancing disaster resilience and performance outcomes of the built environment can mitigate short- and long-term financial risks for an academic institution and its research enterprise.
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. With the evolution of traditional risk management's focus from controlling and mitigating financial exposure and actual losses to a business process integrating strategic institutional objectives and creating a more holistic approach to risk, it has become increasingly imperative that academic research institutions mitigate the impacts of disasters.
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, NYU Langone, Tulane University, and McLean Hospital demonstrate the limitations of insurance in protecting against disaster and should serve as cautionary tales to the leaders of academic research institutions. While New Orleans' academic institutions had insurance policies against hurricanes and floods, the impact of Hurricane Katrina on LSUHSC ultimately was much greater than just the physical damage at some of the institution's facilities.
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could not be claimed as a loss. Because insurance alone will not provide sufficient financial capacity to fund prevention, protection, and mitigation or to pay for all potential disaster response and recovery costs incurred by an institution following a disaster, the committee wishes to emphasize the importance of thorough disaster resilience planning that includes the development of business continuity plans, campus planning focused on disaster mitigation, and risk reduction strategies that prioritize resilience.
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6) Capital Planning and Resource Allocation Strengthening the disaster resilience of the academic biomedical research community may require many of the nation's academic research institutions to depart from the current capital planning processes and resource allocation decisions that are now in place.
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The scale and range of the projects proposed to enhance disaster resilience could be represented on one end by a one-time minor capital improvement project in an individual laboratory and on the other end by a proposed campuswide, 10-year disaster resilience mitigation investment program which would receive annual funding until the scope of the program is completed in the 10th year or later. Regardless, to best understand potential capital needs, academic research institutions are proactively initiating strategic, long-term planning initiatives to identify current and future needs at the departmental and institutional levels, anticipating future growth scenarios, and targeting the capital investments that may be required (UW, 2015)
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support business continuity objectives would serve as an objective capital planning prioritization approach in competition with other, equally important capital needs identified in an institution's comprehensive annual or biennial needs assessment. Capital resources in higher education are typically constrained.
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These mitigation measures could be incorporated in the project's initial and ongoing capital cost models and, ultimately, the institution's capital plan. This approach would serve as a critical instrument in establishing disaster resilience as a high priority and would result in seamless integration within the institution's approved capital plan -- a capital plan that would support institutional business continuity objectives and therefore long-term financial sustainability for the institution's research enterprise.
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. A comprehensive and integrated capital planning process must address investment in the deferred maintenance backlog reduction plan in order to sustain the institution's existing assets, while at the same time meeting disaster resilience plan needs.
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Anticipating and building for disaster resilience requires that academic research institutions not only provide consistent incremental improvements for each minor capital improvement planned, but also that they recognize that reductions in the deferred maintenance backlog are critical in ensuring improved building system performance if and when disaster strikes. Through a reduction of the research enterprise's deferred maintenance backlog, any institution can provide immediate improvements in disaster resilience and ensure investment in the most cost-effective disaster mitigation strategy.
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recommends establishing partnerships with industry-segment consortium groups, health care organizations, hotels, and other academic institutions. Academic research institutions can also partner with emergency management agencies, local law enforcement, fire departments, public works management, and state departments of transportation.
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Stafford Disaster Relief and Mitigation Grant Emergency Assistance Act (Stafford Act) , the Hazard Mitigation Program Grant Program (HMGP)
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. NIH Research Under the Disaster Relief Appropriations Act, NIH provided Facilities Restoration opportunities for funding to restore research facilities damaged or Program destroyed by Hurricane Sandy (NIH, 2016)
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Effective communications and transparent decision making rely upon an understanding by the leaders of the research enterprise and an institution's final decision makers of the synergy among business continuity, disaster resilience, and financial resilience planning activities. Regular shared communications, training, and the creation of other structured opportunities to exercise are important in filling business continuity knowledge gaps from top to bottom among financial officers, emergency management, and key leaders of the research enterprise.
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The risk-layering diagram in Figure 9-3 represents the general understanding that not every disaster is major, or frequent, but it may be an institutional vulnerability nevertheless. It also demonstrates that the range of potential disasters and resulting vulnerabilities may be evaluated and implemented by each institution relative to the specific financing options available: from the highest vulnerability and risk for which an academic institution may wish to consider purchasing either typical or catastrophic commercial insurance coverage, if available, the estabishment of contingent borrowing or credit instruments with the pri l vate banking industry or other funders, to the use of dedicated institutional cash reserves contingent for use in funding disaster recovery.
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To achieve a more disaster resilient institution, each disaster risk financing tool available must be carefully considered. The commitment by the research enterprise to a proactive engagement in business continuity planning and regular training to remain current with changing funder requirements for pre- and post-disaster grants and reimbursement can, in addition to reducing the knowledge gap among insti utional financial officers by integrating business continuity and disaster t resilience planning, serve as critical actions in overcoming the obstacles to the allocation and use of financial resources.
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Financial Incentives Responding to concerns about how to manage the increase in federal expenditures for disaster recovery, in early 2016, FEMA issued the following announcement: In response to calls from Members of Congress, the Government Account bility Office, and the Department of Homeland Security's Office a of the Inspector General over the last several years for FEMA to reform how the federal government supports states following disasters, FEMA is exploring the concept of a disaster deductible. The Agency believes that such an approach has the potential to incentivize mitigation strategies and promote risk-informed decision making to build resilience, including to catastrophic events; reduce the costs of future events for both states and the federal government; and facilitate state and local government planning and budgeting for enhanced disaster response and recovery capability through greater transparency.
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The Academic Institution Considerations section of this chapter noted that disaster prevention, protection, mitigation, response, and recovery planning must be strategically prioritized by each academic research institution, not only to reduce reliance on insurance, but also to establish a future-oriented and resilient vision for the long-term viability of an institution.
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As challenging as it is for institutions to develop funding priorities for annual capital plans, the magnitude of the financial resources required for the implementation of improved disaster resilience capital improvements over 10 to 20 years can be breathtaking. The University of California, Berkeley, which began implementing its Seismic Action Plan for Facilities Enhancement and Renewal in 1997, has invested approximately $1.2 billion in state funds over nearly 20 years and anticipates completing the program, if state funding continues, in perhaps another 10 years (Kapucu and Khosa, 2012)
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Identification of these funding needs and sources must be considered in the development of each institution's annual capital and operating budgets. In support of an institution's annual budget development, the chief financial officer must require a rigorous risk assessment in consultation with expert-level risk management professionals and guided by institutional life safety protection and business continuity plans that support institutional risk reduction and enhance disaster resilience.
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https://assets.publishing.service.gov.uk/ media/57a0895740f0b6497400002a/EoD_Topic_Guide_Risk_Management_Financing_ May_2016.pdf (accessed March 3, 2017)
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2015. Hazard mitigation assistance guidance: Hazard mitigation grant program, pre-disaster mitigation program, and flood mitigation assistance program.
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2016. Emergency preparedness, business continuity and recovery: Lessons learned from Sandy.
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2009. Guide to business continuity and recovery planning on campus.
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