After developing an evacuation plan for the City of New Orleans in 1983, Madhu Beriwal decided she wanted to do her own thing.
It was kind of a crazy idea at the time—wrapping a business around the science of emergency management.
She started with a $3,500 loan and one employee—herself.
Today, Baton Rouge-based IEM is a $40 million firm with 350 workers and offices in eight states, offering everything from IT services to running a weapons incinerator in Alabama. For the last five years, its growth has averaged 25% annually; by 2015, the company hopes to corner $1 billion of the market.
And that concept she conceived for an emergency management business? Projections are that in six years, it will be a $178 billion industry—more than five times what it was the year before Hurricane Katrina struck.
Disaster is now big business.
Nowhere is that more evident than along the 10/12 corridor, which is now home to three university emergency management institutes and dozens of businesses with but one specialty: catastrophe. That includes everything from the guy down the street who started a debris clean-up business to multinational companies with multimillion-dollar Homeland Security and FEMA contracts.
Emergency management for profit got its kick-start in the late 1990s, when Y2K hysteria was at its height. But the threat of terrorism—and then Katrina—was what really fueled the industry. Several former high-level national government officials have seized upon the opportunity, including former FEMA Director James Lee Witt [his partners are former Transportation Secretary Rodney Slater and former NATO Supreme Commander Wesley Clark] and Rudy Guiliani.
“It’s fair to say that especially since 9/11, the money devoted to disaster response has grown quite a bit—both on the research end and consultancy,” says Arjen Boin, an associate professor of business at E.J. Ourso College of Business. “It’s been going up every year. We’re talking millions and millions of dollars. It’s pretty big business.”
ALONG THE CORRIDOR, the Shaw Group and IEM are perhaps the largest and most recognized firms that have capitalized on catastrophe. Although based in Louisiana, the bulk of their work is outside the state. IEM, for example, gets less than 10% of its revenues from Louisiana projects.
When Beriwal got into the business, disaster wasn’t much of an industry. The Office of Homeland Security wasn’t even a concept yet.
In August 2000, the U.S. Department of Defense asked IEM to take part in a study analyzing how the United States was faring in collecting intelligence against terrorism. IEM submitted its report in the summer of 2001, concluding that efforts were not up to par. In September, that theory was proven correct.
In July 2004?after hurricanes Georges in 1998 and Floyd in 1999?FEMA and Homeland Security asked sought IEM’s involvement in developing a joint response plan for a catastrophic hurricane in Southeast Louisiana. The company ran a simulation exercise known as Hurricane Pam. The eight-day scenario centered on a Category 3 storm brought together 250 emergency preparedness officials to develop a strategy for 13 parishes. The following year, Katrina hit.
Says Beriwal: “Those two events have shaped my view of IEM and what it can be.”
Today, the 24-year-old company specializes in four sectors: Homeland Security, IT, Department of Defense services and public performance management. The company’s biggest project to date was an analysis of emergency plans in every urban area in the nation.
Beriwal looks at the firms that have jumped into emergency management since 9/11 [she and others refer to them as “The 9/12ers”] and isn’t bothered by the competition.
“This market is expected to grow tremendously,” she says. “Unfortunately, terrorism and issues of homeland security are here to stay regardless of what happens in the near future. Emergency management has always been with us, and with global warming causing sea level to rise, we will potentially see more disasters. We’re also in the middle of a 30-year cycle of increased hurricane activity.”
THE SHELL OIL refinery in Norco exploded in May 1988?killing seven workers and shattering windows 30 miles away. The company paid $172 million to 17,000 claimants. That’s when Michael Worley decided it was time for a change.
He was working for his father, Ed Worley, at Worley Companies, a firm that provides adjusters, estimators and administrators to insurance companies and large, self-insured businesses. The Shell explosion was his project.
Worley broached his dad about steering the company’s focus to catastrophe management. His dad [like many of Worley Companies clients] was skeptical, but near retirement. By 1995, Worley Companies was a full-blown catastrophic management company. Today, the Hammond-based firm has more than 1,500 employees nationwide and annual revenues of more than $100 million.
The company has been in the middle of the 1989 New Orleans floods, Hurricane Andrew, the Los Angeles earthquake, 9/11, Katrina and?more recently?hurricanes Gustav and Ike.
“I got very interested in the disaster business,” he says. “A lot happens fast, and you have to make decisions quickly on your feet. But it’s a lot bigger business now than when we first jumped off into it 20 years ago.”
But it wasn’t until after Hurricane Katrina that Jeanne Hurlbert, an LSU sociology professor, saw a new business opportunity for her part-time consulting firm, Optinet Resources. The company specializes in helping entrepreneurs build networks. But post-Katrina, it started consulting business on how to build employee support networks in anticipation of a disaster.
“Data before and after Katrina show us the critical role that these support systems plan in helping people recover from disasters,” Hurlbert says. “But even so, it’s really hard to convince businesses they need to do this—even on the Gulf Coast.”
THREE CORRIDOR UNIVERSITIES now have disaster management institutes. The programs are attracting top faculty researchers in the field to the corridor, training students for careers in disaster management, and working with area emergency professionals to develop response and recovery strategies and build cooperative relationships.
LSU’s Stephenson Disaster Management Institute began in the wake of Hurricane Katrina. LSU alumni Emmet and Toni Stephenson gave a $25 million gift to the “Forever LSU” campaign, about $11 million of which was committed to the program.
The Stephensons wanted to create a place where academic researchers, experienced disaster managers, and experts from the private sector could collaborate to study disaster management problems, develop effective solutions to long-standing problems, and disseminate smart practices through executive education and outreach programs.
“Our core mission is to be a trusted third-party thought leader in disaster management,” says SDMI Executive Director Tom Anderson. “We are here in a living laboratory, places where a recurring threat allows researchers to be embedded in and directly observe all components of a disaster and apply their extraordinary research skills to point to what processes could be improved and engage in that conversation.”
SDMI is engaged in a number of research projects, examining how to improve delivery of goods and services during hurricanes, evacuation and shelter management, the challenges of the Stafford Act on assistance and recovery, and understanding people with disabilities in times of crisis. The institute is already getting world attention; last fall, it hosted a delegation from the Netherlands seeking advice on evacuations.
“I think LSU has developed an unbelievably strong expertise level in disaster management,” says Charles D’Agostino, executive director of the Louisiana Business & Technology Center, which itself became a disaster business counseling center after Katrina. “It’s been baptism by fire.”
At UL Lafayette, the mission of the National Incident Management Systems and Advanced Technologies is simple: To research, develop, educate, train, support and supply the nation with all-hazards prevention, preparedness, response, and recovery best-practices.
It, too, was established after the hurricanes to enhance national security and emergency preparedness, not just in Louisiana, but the nation.
NIMSAT is currently analyzing more than 400,000 recorded incidents in the U.S. since 1960 from various publicly available databases and analyses of funding allocations by the Department of Homeland Security. The studies are being used to develop an all-hazards risk map of the nation.
The institute is also assessing critical energy infrastructures along the Gulf of Mexico, analyzing oil, gas, energy and petrochemical supply chains by mapping their upstream and downstream product, process and geospatial interdependencies to determine the impact of their disruptions due to natural, technological and terrorism-related threats.
NIMSAT Executive Director Ramesh Kolluru says emergency management is a unique discipline in that it cuts across multiple disciplines—law enforcement, business, sociology, engineering, biology and others.
“This is the real world, if you will,” Kolluru says. “It’s not a simple problem that you can close the door and as an academician solve it. This is a very stressful industry. My wife is beginning to call me Dr. Doom. But at the end of the day, our mission is saving lives.”
At the University of New Orleans, the Center for Hazards Assessment Response and Technology, or CHART, collaborates with coastal communities to reduce the risk of flooding. More than two dozen students are currently working on 15 different projects.
LOOK FOR MORE growth in the disaster industry to come along the corridor.
Mark Cooper, director of the Governor’s Office of Homeland Security and Emergency Preparedness, insists Louisiana is well on its way to becoming the Silicon Valley of disaster planning.
He says there are plans in the works to establish a command college at LSU to bring together emergency responders and managers to learn about crisis management.
“There’s nothing like that in the country,” Cooper says. “Right now, there are all these separate, individual learning centers. We want to bring all the different functions together.”
There also are efforts to establish an urban search and rescue team in Louisiana. Right now, the closest Type 1 team—those trained to rescue victims of structural collapse—is in College Station, Texas.
“We got very good reviews after Gustav and Ike,” he says. “The bottom line is we’re the heartbeat for emergency management. With all of this expertise, we can do a lot not only for our state, but for other states.”