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1 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
RISK ON THE RISE: COUNTING THE COST OF INLAND FLOODING Dr. Robert Muir-Wood Chief Research Officer
Dr. Navin Peiris Senior Director, Model Development
2 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
MEET THE EXPERTS
Dr. Robert Muir-Wood Chief Research Officer
Dr. Navin Peiris Senior Director,
Model Development
3 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
INLAND FLOOD RISK =
HAZARD EXPOSURE VULNERABILITY X X
FLOOD LOSSES ARE NOT ONLY DEPENDENT UPON HAZARD
4 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
Inundation Rainfall Runoff
Major and Minor Rivers
Defenses and
Drainage
RECAP: HAZARD GENERATION
Precipitation
PRECIPITATION
5 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
INLAND FLOOD RISK =
UNDERSTANDING EXPOSURE
HAZARD EXPOSURE VULNERABILITY X X
THE IMPORTANCE OF UNDERLYING DIGITAL
TERRAIN DATA
7 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
COLLECTING FLOOD-RELEVANT EXPOSURE DATA
TROPICAL STORM ALLISON, 2001
THAI FLOODS, 2011
10 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
1. Where detailed location information is unknown: Exposure Disaggregation
2. Where primary characteristics of a location are unknown: Building Inventory
HOW TO HANDLE SITUATIONS WHERE DETAILED EXPOSURE DATA IS NOT AVAILABLE
11 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
INLAND FLOOD RISK =
TRANSLATING HAZARD AND EXPOSURE INTO LOSS
HAZARD EXPOSURE VULNERABILITY X X
FLOOD DAMAGE TO BUILDINGS IS PRINCIPALLY
NONSTRUCTURAL
STRUCTURAL DAMAGE CAN OCCUR WHERE HIGH FLOW CONDITIONS EXIST
THERE IS OFTEN SUBSTANTIAL DAMAGE TO CONTENTS
15 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016 Copyright © 2015 Risk Management Solutions, Inc..
THE LIKELIHOOD OF FLOODING OF A SPECIFIC PROPERTY IS DEPENDENT UPON A NUMBER
OF FACTORS
A number of factors in addition
to hazard determine if a
specific property is flooded
16 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016 Copyright © 2015 Risk Management Solutions, Inc..
Characterization of flood
vulnerability
DamageRa
(o
FloodDepth
Probabilityofcompleteloss
Probabilityofnoloss
MeanDamageRa(o
Centraldistribu5on
17 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016 Copyright © 2015 Risk Management Solutions, Inc..
Uncertainty in flood loss data
and challenges in vulnerability development
Wide distribution of claims data on a flood depth vs. loss ratio plot highlights the level of uncertainty in flood loss estimation and hence challenges faced during development of vulnerability functions
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 50 100 150 200 250 300 350
LossRa(
o
FloodDepth(cm)
Groundflooronly Cellarandgroundfloorflooded Cellaronly
18 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
CONSTRUCTING AN ADVANCED FLOOD VULNERABILITY CURVE
Single-Component, Engineering-
Based Approach
Country-Specific Damage Functions
Validated by Claims Data
Dam
age
Rat
io
Flood Depth
19 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
DIFFERENTIATION OF FLOOD VULNERABILITY
Property Elevation
Threshold Elevation
Basement and Basement
Occupancies
Number of Stories
Property Age
Construction Type
Private Flood
Defenses
20 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
IMPACT OF EXPOSURE CHARACTERISTICS UPON LOSSES
21 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
SPECIAL TREATMENT OF INDUSTRIAL FACILITIES
PETROCHEMICAL/OIL REFINERY SEMICONDUCTOR FABRICATION FACILITY
POST-EVENT LOSS AMPLIFICATION (PLA) CAN PROVIDE AN ADDITIONAL
SOURCE OF LOSS
23 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
CALIBRATION AND VALIDATION STEPS ENSURE THAT MODELED LOSSES ARE REALISTIC
2007 U.K. Floods
• 50% of 2007 U.K. flood losses were off-floodplain
• Industry consensus of 30-50 year return period losses
U.K. Flood Model
• 50% of annual average loss from pluvial flooding
• 30-50 year return period aligned to modelled exceedance probability
2013 Central European
Floods
• 40% of losses in Germany were off-floodplain
• Industry consensus of 40-50 year return period losses
Continental Europe Flood
Models
• 20-40% of annual average loss from pluvial flooding
• 40-50 year return period a good validation point for the model
24 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
DETERMINING LOSSES IN REAL TIME IN THE AFTERMATH OF FLOOD EVENTS
INLAND FLOOD RISK =
HAZARD EXPOSURE VULNERABILITY X X
A STOCHASTIC EVENT THAT MATCHES THE OBSERVED EVENT CLOSELY
ENOUGH FOR AN ACCURATE LOSS ESTIMATE IS UNLIKELY TO EXIST
26 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
CHALLENGES IN DEVELOPING FLOOD FOOTPRINT RECONSTRUCTIONS
Location of Defense Failures
Uncertain
Measurements of River Discharge
Can Be Unreliable or Nonexistent
Inaccuracies in Using Satellite Data
Alone
27 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016 Copyright © 2015 Risk Management Solutions, Inc..
HOW AN EFFECTIVE FLOOD FOOTPRINT IS DEVELOPED 1. Identify which
areas have been flooded
2. Understand the return period of flooding and use appropriate flood maps to determine inundation
3. Validate using damage survey measurements RMS-surveyed flood depths (red outlined circles), modeled footprint (blue shading), and PERILS-based
accumulation footprint (green outline) for the 2013 central European floods in Meissen, Germany
28 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016 28 28 Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
LESSONS LEARNED FROM RECENT RECONNAISSANCE
29 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
THE 2013 CENTRAL EUROPEAN FLOODS – HIGHLIGHTED THE NEED FOR GRANULAR EXPOSURE DATA
EXTERNAL DAMAGE INTERNAL DAMAGE
30 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
THE 2013 CENTRAL EUROPEAN FLOODS – OIL CONTAMINATION LEADING TO WRITE-OFF § Loss exacerbated by the presence of oil contamination leads to demolition and reconstruction
31 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
DECEMBER 2015, STORM DESMOND FLOODS, U.K. - RESIDENTIAL PROPERTY DAMAGE – DAMAGE TO BASEMENTS
32 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
DECEMBER 2015, STORM DESMOND FLOODS, U.K. - POWER OUTAGES
§ Flooded electricity substation in Lancaster led to power outages for 55,000 homes and business throughout north Lancashire up to 2 weeks
33 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
DECEMBER 2015, STORM EVA FLOODS, U.K. – CHALLENGES OF FLOOD FOOTPRINT DEVELOPMENT - YORK
River Foss
River Ouse
Flood gates
34 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
DECEMBER 2015, STORM EVA FLOODS, U.K. – ELEVATION, BASEMENTS, FLOOD DEFENCES DRIVING COMMERCIAL LOSSES
Damage to commercial properties and contents on Walmgate, York
BT building on Garden Place with sandbags and basement being pumped,, Leeds
35 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
MONSOON FLOODING IN CHENNAI, INDIA, NOVEMBER 2015
§ Business Interruption loss driven damage to facilities as well as unavailability of man-power due to access difficulties and government announcing 2-day holiday for safety reasons
36 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
Dr. Robert Muir-Wood Chief Research Officer
Dr. Navin Peiris Senior Director, Model Development
CONCLUSIONS 1. Detailed exposure data is vital for an accurate estimate of losses
2. An engineering based vulnerability approach is most robust for flood
3. Losses from real events can be estimated accurately in real time
4. Lessons learned from reconnaissance feed into model science
ABOUT RMS RMS is the world’s leading provider of products, services, and expertise for the quantification and management of catastrophe risk. More than 400 leading insurers, reinsurers, trading companies, and other financial institutions rely on RMS models to quantify, manage, and transfer risk. As an established provider of risk modeling to companies across all market segments, RMS provides solutions that can be trusted as reliable benchmarks for strategic pricing, risk management, and risk transfer decisions.
©2014 Risk Management Solutions, Inc. RMS and the RMS logo are registered trademarks of Risk Management Solutions,Inc. All other trademarks are property of their respective owners.
37 Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
ABOUT RMS RMS is the world’s leading provider of products, services, and expertise for the quantification and management of catastrophe risk. More than 400 leading insurers, reinsurers, trading companies, and other financial institutions rely on RMS models to quantify, manage, and transfer risk. As an established provider of risk modeling to companies across all market segments, RMS provides solutions that can be trusted as reliable benchmarks for strategic pricing, risk management, and risk transfer decisions.
©2014 Risk Management Solutions, Inc. RMS and the RMS logo are registered trademarks of Risk Management Solutions,Inc. All other trademarks are property of their respective owners.
37 Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016