What Role Does the Private Sector Have in Supporting Disaster Recovery, and What Challenges Does It Face in Doing So?

by Anita Chandra, Shaela Moen, Clarissa Sellers

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Research Questions

  1. How is the private sector contributing in supporting disaster recovery financing?
  2. What challenges does it face in doing so?
  3. What are potential opportunities for future involvement?

The changing scope and scale of disasters, both natural and technological, have altered the ways in which disaster management and financing are addressed and the roles of private-sector organizations specifically. Businesses and nonprofit organizations are increasingly central to the process, offering critical support in immediate disaster response but also contributing necessary redevelopment funding that supports community recovery. Although these new expectations position the private sector as a key leader in community resilience, these responsibilities have not been fully met with established guidance or clear metrics for how and when these organizations should participate in disaster recovery and financing.

This perspective examines key issues confronting the private sector in disaster recovery financing, what roles private-sector entities have played, and where there has been successful integration or leadership of these organizations. The perspective also briefly explores challenges that the private sector faces, with particular attention to issues of information use and application, coordination in response and recovery, and timing of funding. Given continued data gaps in this field, the authors offer opportunities for research and policy analysis.

Key Findings

The Private Sector Contributes to Disaster Recovery Financing in a Variety of Ways

  • The private sector contributes to disaster recovery financing in a variety of ways, including playing a key role in early response and long-term recovery, collaborating with the public sector in public–private partnerships, driving innovation and facilitating technology use, helping smaller communities manage influxes of funds, and supplementing federal disbursement processes.

Public–Private Partnerships Are Integral

  • They can help to increase efficiency and effectiveness in disaster management. The partnerships between private actors and public-sector partners and recipients can alter the strategic focus of disaster management agencies.
  • Public–private partnerships can reduce the burdens placed on government to provide certain goods and services immediately and over time, permitting the public sector to focus on other important strategic priorities.
  • For-profit businesses can provide important templates informing the design of public-sector programs.

The Private Sector, Particularly Businesses, Is Key to Disaster Recovery

  • The private sector is key to developing and implementing flexible financing models. It is also critical in ongoing resilience development.

The Private Sector Faces Challenges When It Comes to Financing

  • These challenges arise from information availability, tracking the flow and timing of funds, and basic challenges in what financial supports can be provided, particularly by business. Further, explaining the value of business investment in recovery can be difficult.

Recommendations

  • Determine the full extent of private-sector contributions in disaster recovery.
  • Extend private- and public-sector disaster recovery analyses to include comparative value of private-sector engagement and assessment of coordination.
  • Assess initiatives in which private-sector organizations, particularly businesses, assist in supporting resilience.

This research was conducted by the Center for Catastrophic Risk Management and Compensation within RAND Justice, Infrastructure, and Environment.

This report is part of the RAND Corporation perspective series. RAND perspectives present informed perspective on a timely topic that address the challenges facing the public and private sectors. All RAND perspectives undergo rigorous peer review to ensure high standards for research quality and objectivity.

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