Fall 2008 Version Professor Dan C. Jones FINA 4355

Risk Management and Insurance: Perspectives in a Global Economy 5. Catastrophe Risk Assessment: Natural Hazards Professor Dan C. Jones FINA 4355

3 Study Points Catastrophic events Definitions Trends Types of natural disasters Gee Gees (Insight 5.3)

4 Swiss Re Definition for 2007 Reporting Period For 2006 Reporting Period: Shipping – 16.1M Aviation – 32.2 M Other Losses – 40 M Or Total Losses – 80M

5 (United Nations) – Munich Re Definition

6 Frequency of Catastrophes (Figure 5.1) → 2007

7 Overall and Insured Losses Yearly economic and insured losses from great natural catastrophes, along with trend lines for each. Economic reasons explain much of the concentration trend. Additionally, people are drawn to areas that hold potential for greater economic prosperity, such as cities. Personal reasons explain this concentration trend. Figure 5.2

8 Overall and Insured Losses (Figure 5.2)

9 Insured Losses (Figure 5.2) → 2007

10 Types of Natural Disasters Earthquakes Storms Floods Volcanism

11 World Map of Natural Hazards Earthquake Storm Volcanic Eruption Other Flood Source: World of Natural Hazards (2000)

12 Earthquakes Earthquakes are caused by friction between moving tectonic plates. Earthquakes originate at fairly well-defined faults. The Pacific Rim is especially prone to earthquake activity Ring of Fire (Figure 5.3) Recent events 1976 Tangshan, China 2003 Iranian earthquake 2005 in Kashmir, Pakistan

13 Ring of Fire

14 Tsunamis and Earthquakes Tsunami Large, rapidly moving ocean waves produced by the displacement of water caused by earthquakes, landslides, volcanic eruptions or even a sufficiently large meteorite impact. December 26, 2004, Tsunami near Indonesia Canary Islands (Insight 5.1)

15 Storms Generically known as “tropical storms” Various names by region Typhoon Severe tropical cyclone Severe cyclonic storm Tropical cyclone

16 Beaufort Scale of Wind Velocity

17 Saffir–Simpson Scale

18 Average Number of Tropical Storms and Hurricanes

Hurricane Season A highly active start to the season Peak intensity values Lowest central pressure ever recorded Record number of named tropical cyclones New areas affected – Europe and Africa Hurricane Katrina (U.S.) and a failure of government Insight 5.2 Also check “A Failure of Initiative”A Failure of Initiative

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21 Floods Partial or complete inundation of a normally dry land area caused by an overflow of tidal, river, or lake water or after a heavy rain 100-year flood Flood damage can result from a single event, such as a hurricane or thunderstorm. Floods also occur due to repeated exposure to rainfall. Is Your Home Safe? Is Your Home Safe?

22 Volcanism Volcano The vents in the earth’s crust through which gases, molten rock or lava, and solid fragments are discharged and to the conical shaped mountains or hills produced by the lava and other erupted material around the vent Lava Magma Volcanic hazard assessment Climate change and volcanism

23 Worst Catastrophes – Casualty (History) Storm and flood in Bangladesh (11/14/1970) → 300,000 Earthquake [M7.5] in China (7/28/1976) → 255,000 Earthquake [M9] and tsunami in Indonesia (12/26/2004) → 220,000 Cyclone Gorky in Bangladesh (4/29/1991) → 138,000 Earthquake [M7.7] and landslide (Pakistan, India, Afghanistan) → 73,300 … Heat wave in Europe (6/1/2003) → 35,000 Kobe, Japan, earthquake [M7.2] (1/17/1995) → 6,425

24 Worst Catastrophes – Cost (History) Hurricane Katrina in the US (8/25/2005) → $68B Hurricane Andrew in the US (8/23/1992) → $23B Terror attacks in the US (09/11/2001) → $22B Northridge earthquake [M6.6] in the US (1/17/1994) → $19B Hurricane Ivan in the US (9/2/2004) → $14B … Earthquake [M9] and tsunami in Indonesia (12/26/2004) → $2B

25 Summary of Discussion – Gee Gees (Insight 5.3) Add your/students’ points!

Discussion Questions

27 Discussion Question 1 Is your country of birth or residence immune from natural catastrophe? If not, find the records of recent natural events that caused human casualty, property damage or both. Do they meet the definition of catastrophe by an international organization or insurer?

28 Discussion Question 2 Discuss why tsunamis are closely related to earthquakes.

29 Discussion Question 3 What are the possible factors affecting the rise of natural catastrophes in modern society? Describe the factors also reflecting the environments in the region with which you are familiar (e.g., the Caribbean, northern European or South Pacific).

30 Discussion Question 4 Investigate the process of recovery from Hurricane Katrina (U.S.), the 2004 tsunami (Indian Ocean), or any major natural catastrophe in recent years. Examine the scale, scope and speed of the process to estimate how long it will take to complete it.