This question is testing PARALLELISM.

Let's break the original sentence down:

Modifier: (Warning that computers in the United States are not secure,)
SUBJECT: the National Academy of Sciences
VERB: has urged the nation to
1. revamp (computer security procedures),
2. institute new emergency response teams, (creating a special nongovernment organization to take charge of computer security planning.)
3. ... and...

"Revamp" and "institute" in the non-underlined portion form part of a list, but there is no "and" connecting them. This tells us that "create" must be the 3rd list item, and we need "and" to connect the list: X, Y, and Z.

In the original, "creating..." is a participial phrase modifying the entire clause before it. This makes no sense - creating an organization for computer security planning doesn't give us additional information about anything previous. Eliminate A, B, and C.

The correct idiom is "create X to do Y" not "create X for doing Y." The correct answer is E.