States and cities are poorly equipped to deal with the fallout from cyber attacks, according to a new study released by the Federal Emergency Management Agency.

President Obama commissioned the first-of-its-kind National Preparedness Report to assess the nation's readiness in the event of a wide range of crises, from natural disasters to public health emergencies to terrorist attacks. State and local officials said they were least prepared to handle cyber attacks.

The Nation is highly reliant upon interdependent cyber systems, yet stakeholders have an incomplete understanding of cyber risk and inconsistent public and private participation in cybersecurity partnerships, the report said.

Cybersecurity has begun receiving more attention as attacks on businesses and government agencies, including one last March in which hackers pilfered 24,000 sensitive Pentagon files, have underscored their lack of preparedness. Defense officials have urged more measures to bolster cybersecurity, warning about the potential not only of theft but of a crippling attack on government networks or cyber grids.

Federal agencies have reported a 650 percent increase in cyberattacks over the last five years, the report said, with nearly two thirds of American companies citing at least once incident. The report warned of catastrophic consequences if attacks strike critical infrastructure centers, but it did point to some progress towards shoring up cybersecurity, including the Department of Homeland Security and Department of Defense partnering on a Joint Cybersecurity Services Pilot and the implementation of a National Cybersecurity Protection System that was monitoring about a third of federal agencies by the end of 2011.

Federal and private sector partners have accelerated initiatives to enhance data collection, detect events, raise awareness, and respond to cyber incidents, the report said.

The report also found states and cities need to improve their capacity to help communities recover from natural disasters by providing housing, establishing social services and rebuilding shattered infrastructure.

Areas of strength included different agencies sharing intelligence and information, which the report said has been fortified by coordination between federal, state and local law enforcement since Sept. 11, 2001. Similarly, states and localities have improved their ability to ensure communication between different agencies in the event of an emergency.

The country has a robust framework for dealing with chemical, biological or nuclear hazards. Its public health system has the resources to be highly responsive to public health crises like pandemics, the report said, although hospitals are still overwhelmed by the numbers of patients seeking help in day-to-day, non-emergency situations.