Global Assessment Report on Disaster Risk Reduction 2013
From Shared Risk to Shared Value: the Business Case for Disaster Risk Reduction

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Part I - Chapter 3
The past is not a good guide to
the future
No two disasters are alike. Along a major earthquake fault line, in a large river basin or along a coastline, an infinite number of hazard events could occur. However, most of these have yet to happen. Therefore, although patterns and trends of disaster loss provide a guide to the past, they are often not sufficient to predict and estimate losses that may occur at present and in the future.
Historical records may provide information on hazard events that have occurred, even over several hundred years. However, in any given location, many events, particularly extreme events that only occur every thousand years or so have yet to materialise. In order to explore future risks, therefore, it is necessary to look beyond historical losses.
For GAR13, a probabilistic approach to risk modelling has been adopted. This approach estimates the probability of events of different severity occurring in a given location, including extreme and infrequent events that have not yet occurred (or which we have no records of), but which could potentially occur in future. Historical losses are integrated into this model, as they are an important source of information.
Of interest to investors and businesses exploring new terrain, a new global analysis, carried out for the GAR, is beginning to map the contours of this risk landscape. The objective of the GAR global risk model is to provide comparable disaster risk metrics for all countries and territories in the world.
As Figure 3.1 highlights, initial global risk estimates for earthquakes and cyclonic winds and an improved estimate for tsunami exposure are now available.
At present, the estimates refer to the risk of direct loss to urban produced capital i and are agglomerated at the country level. ii The model does not estimate the risks of indirect loss owing to business in-
Patterns of intensive risk have developed along the fault lines of four decades of economic development and globalisation. The potential consequences of these risks can now be estimated and visualized. A first ever global probabilistic assessment allows for a better understanding of intensive risk for earthquakes and cyclonic winds.
The results from the global assessment are a wake-up call: global average annual losses from earthquakes alone are estimated to exceed US$100 billion. Of these, 80 percent are concentrated in high-income countries. Probable maximum losses for Japan and the United States of America in the case of a catastrophic one-in-250 year earthquake are over US$100 billion. In these countries, high exposure is the key driver of disaster risk.
Vulnerability continues to determine risk levels, particularly in low and middle-income countries. Philippines and Puerto Rico could lose more than 15 percent of their exposed capital stock to winds from a catastrophic one-in-250 year tropical cyclone.
Roughly 80 percent of cyclonic wind risk is concentrated in Asia. The continent also has significant tsunami exposure, with Japan leading in both absolute and relative exposure of its people. However, smaller economies, including many SIDS, can expect higher losses relative to their capital stock for all hazards
Risk maps
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