Emergency management practitioners struggle to justify investments in “contingent capabilities:” backup systems, surge capacity, and strategic reserves that provide value only during disasters.

Strategic planning and real options theory begin with the end in mind. Both require the decision-maker to think forward through all possible and probable scenarios and options and reason backward.

We then compared capital expenditures, real options, and strategic value with the more traditional net present value method of evaluating a five-step investment in the construction and deployment of ...