About the RAND Kenneth R. Feinberg Center for Catastrophic Risk Management and Compensation

Catastrophes such as hurricanes, floods, earthquakes, large-scale industrial accidents, and terrorist attacks kill thousands of people worldwide each year and cause tremendous economic loss. At the same time, use of defective products or exposure to hazardous substances can cause widespread injury and economic loss.

A wide range of institutions and programs provide compensation for catastrophic losses including:

• insurance
• tort liability
• government compensation programs
• philanthropy
• business assistance to employees and the broader community

Together these components create a complex system that, in addition to providing compensation, creates incentives to that take actions that reduce the potential loss in the first place.

Although much progress has been made in the United States over the last 50 years in preparing for and providing compensation following catastrophes, the current system has serious shortcomings. The response of public decisionmakers is ad hoc, and more attention could be paid to the lessons learned from past events. Coordination between system components can be poor, with little agreement on the role that each component should play in different types of disasters.

Progress has also been made in the court procedures and administrative processes that are available to address widespread losses, but challenges remain regarding how to expeditiously and efficiently process large numbers of claims. The result can be uneven compensation and undesirable impacts on the incentives to avoid losses.

The Feinberg Center Fills a Need

This Center's mission is to improve the institutions, program, and policies that provide compensation to victims for incidents causing widespread loss and to create incentives that minimize the risk of future harm by:

• Exploring strategies for increasing insurance coverage for widespread losses and examining the appropriate roles of the public and private insurers in providing insurance
• Investigating approaches for compensating uninsured losses after major events, whether through compensation funds or remedies available in the civil justice system
• Stimulating discussion and consideration of innovative solutions that improve efficiency in providing compensation and services following mass events while appropriately allocating liability to responsible parties.

The result of the Center's work is a body of research that analyzes the advantages and disadvantages of different approaches to disaster compensation and risk mitigation. Lessons learned from previous incidents both in the United States and abroad are distilled to create a body of research that will help policymakers craft appropriate policies both in anticipation of and following humanmade and natural disasters. It actively disseminates its findings, conducts workshops and seminars for stakeholders, and provides information and comments on proposals for change.

For more information, contact Lloyd Dixon at (310) 393-0411, ext. 7480.