GAR 2015 Main Report

141

7.7 Living in a modelled world

The volume of risk information produced has increased significantly over time and is accompanied by associated communities of practice, increasing data availability and scientific and technical capacities to transform that data into risk information.

In parallel with the growth of the disaster risk management sector as a whole, there has been equally exponential growth in the number of people and institutions involved in risk assessment. At all levels, the volume of risk information produced has increased significantly, and this development has been accompanied by a commensurate increase in the size of the associated community of practice, in the data available and in the scientific and technical capacities to transform that data into risk information. The series of Understanding Risk meetings organized by the World Bank since 20105 highlights the emergence of an increasingly large and dedicated community of practice in this area. It would appear that disaster risk management is increasingly taking place in a modelled world.

Until the early 1990s, much of the insurance industry based its business decisions on actuarial approaches using historical data. The use of catastrophe risk models in this industry grew dramatically after Hurricane Andrew, which struck

Florida in 1992 and gave rise to insured losses far greater than those expected on the basis of historical experience ( GAR 13 paper

GFDRR, 2014a

GFDRR (Global Facility for Disaster Reduction and Recovery). 2014a,Understanding Risk: The Evolution of Disaster Risk Assessment since 2005, Background Paper prepared for the 2015 Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland: UNISDR..
Click here to view this GAR paper.

). Shortly after the hurricane made landfall, the risk-modelling company AIR modelled and estimated the insured losses; these were far larger than any experienced in the past and closer to the actual insured losses from the hurricane.

The arrival of powerful personal computers in the early 1990s ushered in the era of mathematical modelling of disaster risks using probabilistic approaches. Following Hurricane Andrew, the insurance industry began to invest heavily in risk modelling in order to set premiums appropriately and to protect itself against insolvency.

With a few notable exceptions,6 probabilistic risk modelling was largely confined to the insurance industry and to specialized risk modelling companies until the advent of the HFA. While many national and local governments, international organizations and non-governmental organizations carried out risk assessments, these were generally qualitative in character (e.g. highlighting areas of low, medium or high risk) or deterministic (calculating risk quantitatively for one particular hazard scenario) and limited by the availability of historical data.

The HFA gave detailed guidance on key activities in risk assessment under Priorities for Action 2 and 3 (Box 7.6).

Box 7.6 Key activities related to risk assessment in the HFA

National and local risk assessments

(a) Develop, update periodically and widely disseminate risk maps and related information to decision-makers, the general public and communities at risk in an appropriate format.

(b) Develop systems of indicators of disaster risk and vulnerability at national and sub-national scales that will enable decision-makers to assess the impact of disasters on social, economic and environmental conditions and disseminate the results to decision makers, the public and populations at risk.

(c) Record, analyse, summarize and disseminate statistical information on disaster occurrence, impacts and losses on a regular basis through international, regional, national and local mechanisms.

	141 7.7 Living in a modelled world The volume of risk information produced has increased significantly over time and is accompanied by associated communities of practice, increasing data availability and scientific and technical capacities to transform that data into risk information. In parallel with the growth of the disaster risk management sector as a whole, there has been equally exponential growth in the number of people and institutions involved in risk assessment. At all levels, the volume of risk information produced has increased significantly, and this development has been accompanied by a commensurate increase in the size of the associated community of practice, in the data available and in the scientific and technical capacities to transform that data into risk information. The series of Understanding Risk meetings organized by the World Bank since 20105 highlights the emergence of an increasingly large and dedicated community of practice in this area. It would appear that disaster risk management is increasingly taking place in a modelled world. Until the early 1990s, much of the insurance industry based its business decisions on actuarial approaches using historical data. The use of catastrophe risk models in this industry grew dramatically after Hurricane Andrew, which struck Florida in 1992 and gave rise to insured losses far greater than those expected on the basis of historical experience (GFDRR, 2014a x GFDRR (Global Facility for Disaster Reduction and Recovery). 2014a,Understanding Risk: The Evolution of Disaster Risk Assessment since 2005, Background Paper prepared for the 2015 Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland: UNISDR.. Click here to view this GAR paper. ). Shortly after the hurricane made landfall, the risk-modelling company AIR modelled and estimated the insured losses; these were far larger than any experienced in the past and closer to the actual insured losses from the hurricane. The arrival of powerful personal computers in the early 1990s ushered in the era of mathematical modelling of disaster risks using probabilistic approaches. Following Hurricane Andrew, the insurance industry began to invest heavily in risk modelling in order to set premiums appropriately and to protect itself against insolvency. With a few notable exceptions,6 probabilistic risk modelling was largely confined to the insurance industry and to specialized risk modelling companies until the advent of the HFA. While many national and local governments, international organizations and non-governmental organizations carried out risk assessments, these were generally qualitative in character (e.g. highlighting areas of low, medium or high risk) or deterministic (calculating risk quantitatively for one particular hazard scenario) and limited by the availability of historical data. The HFA gave detailed guidance on key activities in risk assessment under Priorities for Action 2 and 3 (Box 7.6). Box 7.6 Key activities related to risk assessment in the HFA National and local risk assessments (a) Develop, update periodically and widely disseminate risk maps and related information to decision-makers, the general public and communities at risk in an appropriate format. (b) Develop systems of indicators of disaster risk and vulnerability at national and sub-national scales that will enable decision-makers to assess the impact of disasters on social, economic and environmental conditions and disseminate the results to decision makers, the public and populations at risk. (c) Record, analyse, summarize and disseminate statistical information on disaster occurrence, impacts and losses on a regular basis through international, regional, national and local mechanisms.	Page 1 Page 10 Page 20 Page 30 Page 40 Page 50 Page 60 Page 70 Page 80 Page 90 Page 100 Page 110 Page 120 Page 130 Page 131 Page 132 Page 133 Page 134 Page 135 Page 136 Page 137 Page 138 Page 139 Page 140 Page 141 Page 142 ->Page 143 Page 144 Page 145 Page 146 Page 147 Page 148 Page 149 Page 150 Page 151 Page 152 Page 153 Page 154 Page 155 Page 160 Page 170 Page 180 Page 190 Page 200 Page 210 Page 220 Page 230 Page 240 Page 250 Page 260 Page 270 Page 280 Page 290 Page 300 Page 310