Risk on the Rise: Managing Inland Flood Risk

1 Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. October 13, 2015

RISK ON THE RISE: MANAGING INLAND FLOOD RISK Dr. Christine Ziehmann Model Product Management

Dr. Arno Hilberts Model Development

Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. October 13, 2015


MEET THE EXPERTS

Dr. Christine Ziehmann Vice President,

Model Product Management

Dr. Arno Hilberts Senior Director,

Model Development


HOW DO YOU DEFINE INLAND FLOOD?

Surface Water Flooding 2012 UK Flood Sequence

Riverine Flooding 2013 Central Europe

US$1.8 B

486 K CLAIMS US$4.2 B

7 COUNTRIES



Flash Flooding 2014 Midwest Flash Flood, USA

US$1.8 B

75 K IMPACTED

Second-highest 24-hour rainfall Detroit, MI USA 2014

116 mm


US$9 B 41 FATALITIES


Tropical Storm-Induced Flooding Tropical Storm Allison, Houston TX USA

~ week

~1,000 mm


>US$45 B >6 MONTHS IN PLACES


Monsoon Flooding 2011 Thailand Foods

>13 M AFFECTED

815 FATALITIES


MANY WAYS TO THINK ABOUT INLAND FLOOD…

>US$45 B Economic Loss

~33% Insured

~US$9 B Economic Loss

~55% Insured

~US$1.8 B Economic Loss

~28% Insured

>US$2.5 B Economic Loss

~60% Insured

~US$16.8 B Economic Loss

~25% Insured

The cost to the industry varies considerably


DIFFERENCES IN GLOBAL FLOOD RISK MANAGEMENT

HAZARD POOLS

HIGH COVERAGE

LOW COVERAGE

NFIP

Flood Re

NCIF

50 - 60%

40 - 70%

up to 75%

BR, EC, MX

CN, PH, TW

AT, DE, IT, TR


PAST CHALLENGES TO PROFITABILITY

§  US GOVERNMENT POOL CASE STUDY: NFIP

–  Run at a loss four out of past 10 years

–  2005: losses were 900% of premium

–  Peak losses were coastal, but inland has attritional impact

§  INSURANCE INDUSTRY CASE STUDY: U.K.

–  Significant loss history: 2013-14, 2012, 2007, 2005, 2000, and more

–  Insurance industry almost pulled out

–  Government and industry agreement on Flood Re as preferred solution


PAST CHALLENGES FOR INLAND FLOOD RISK

Characteristics that have not been well understood:

FREQUENCY SEVERITY CHANGING ENVIRONMENT

SPATIAL EXTENT

SPATIAL VARIABILITY

WATER DEPTH


EVENT CHARACTERISTICS VARY SIGNIFICANTLY: FREQUENCY OF SEVERE EVENTS

ANNUAL

ANNUAL

DECADAL

DECADAL >ANNUAL


~WEEKS

~HOURS TO DAYS

~DAYS

~DAYS TO WEEKS ~HOURS

EVENT CHARACTERISTICS VARY SIGNIFICANTLY: PRECIPITATION DURATION


EVENT CHARACTERISTICS VARY SIGNIFICANTLY: AREA IMPACTED

COUNTRY

REGION

CITY

CONTINENT CITY


INDUSTRIAL DEVELOPMENT

LAND USE

CLIMATE

DEFENSES DRAINAGE

EVENT CHARACTERISTICS VARY SIGNIFICANTLY: CHANGES IN RISK


UNDERSTANDING THIS COMPLEX PERIL

Where does it all begin?

PRECIPITATION


UNDERSTANDING PRECIPITATION IS THE FOUNDATION TO UNDERSTANDING INLAND FLOOD RISK

PRECIPITATION FREQUENCY: TIMELINE OF

EVENTS

SEVERITY: INTENSITY OF

EVENTS

EXTENT: SPATIAL

CORRELATION

ENVIRONMENT: ANTECEDENT CONDITIONS


DEVELOPING A FRAMEWORK TO UNDERSTAND AND MODEL INLAND FLOOD RISK

RISK VULNERABILITY HAZARD


Inundation Rainfall runoff

Major and minor rivers

Defenses and

drainage

DEVELOPING A FRAMEWORK TO UNDERSTAND AND MODEL INLAND FLOOD RISK

Precipitation

PRECIPITATION


DEVELOPING A FRAMEWORK: WHY BEGIN WITH PRECIPITATION?

Time

Riv

er F

low



Defenses and

drainage Precipitation

FREQUENCY: TIMELINE OF

EVENTS





Defenses and


SEVERITY: INTENSITY OF

EVENTS



Correlation of monthly peak flows in Vienna (Danube) and Dresden (Elbe)



Defenses and


EXTENT: SPATIAL

CORRELATION



How severe would the flooding be if the antecedent conditions of 2013 were combined with the extreme event precipitation observed in 2002?



Defenses and


2013 Wetness

ENVIRONMENT: ANTECEDENT CONDITIONS


HYDROLOGICAL PROCESSES

DEVELOPING A FRAMEWORK: WHERE DOES THE PRECIPITATION GO?

§  High resolution; 40-50 m

§  Less than daily time steps

§  Continuously for 103 years



Defenses and



HIGH RESOLUTION

≠ HIGH ACCURACY

DEVELOPING A FRAMEWORK: WHERE DOES THE PRECIPITATION GO?

50 m DTM, ground-truthed

5 m DTM, LIDAR



Defenses and



COMPLETE NETWORK

DEVELOPING A FRAMEWORK: WHERE CAN FLOODING OCCUR?

Major vs. minor



Defenses and



COMPLETE NETWORK




Defenses and


Extensive river network defined


COMPLETE NETWORK




Defenses and


Extensive river gauge data


DRAINAGE

DEVELOPING A FRAMEWORK: FACTORS THAT CAN INFLUENCE FLOOD SEVERITY

Understand current design standards…

and be aware of developing environments



Defenses and



DEFENSES


Must consider for temporary and permanent defenses



Defenses and



DEFENSES


What about defense failure?



Defenses and



DEVELOPING A FRAMEWORK: UNDERSTANDING THE EXTENT OF POTENTIAL FLOODING

EUROPE SOUTH KOREA USA



Defenses and



CONCLUSIONS

Historically, inland flood risk has been a challenge to manage

FREQUENCY SEVERITY CHANGING ENVIRONMENT

SPATIAL EXTENT

SPATIAL VARIABILITY

WATER DEPTH


CONCLUSIONS

Today we have the knowledge and tools to explicitly model and understand the risk from its source

FREQUENCY: Timeline of events

ENVIRONMENT: Antecedent conditions

SEVERITY: Intensity of events

EXTENT: Spatial correlation

PRECIPITATION

A comprehensive modeling approach is the only way to truly understand inland flood risk

34 Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. October 13, 2015 Copyright © 2015 Risk Management Solutions, Inc. .

INLAND FLOOD IS A

COMPLEX AND VARIED PERIL WE NOW HAVE THE TOOLS TO

UNDERSTAND AND MANAGE THE RISK

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.

©2015 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.


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.


Economy & Finance

Risk on the Rise: Managing Inland Flood Risk