Risk on the Rise: Counting the Cost of Inland Flooding

1Copyright © 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

MEET THE EXPERTS
Dr. Navin Peiris
Senior Director,
Model Development

INLAND FLOOD RISK =
HAZARD EXPOSURE VULNERABILITYX X
FLOOD LOSSES ARE NOT ONLY DEPENDENT UPON HAZARD

Inundation
Rainfall
Runoff
Major and
Minor
Rivers
Defenses
and
Drainage
RECAP: HAZARD GENERATION
Precipitation
PRECIPITATION

INLAND FLOOD RISK =
UNDERSTANDING EXPOSURE

THE IMPORTANCE OF
UNDERLYING DIGITAL
TERRAIN DATA

COLLECTING FLOOD-RELEVANT EXPOSURE DATA

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

INLAND FLOOD RISK =
TRANSLATING HAZARD AND EXPOSURE INTO LOSS

FLOOD DAMAGE TO
BUILDINGS IS PRINCIPALLY
NONSTRUCTURAL

STRUCTURAL DAMAGE
CAN OCCUR WHERE HIGH
FLOW CONDITIONS EXIST

THERE IS OFTEN SUBSTANTIAL
DAMAGE TO CONTENTS

15Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016Copyright © 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

Characterization
of flood
vulnerability
Damage Ra(o
Flood Depth
Probability of
complete loss
Probability of no loss
Mean Damage Ra(o
Central distribu5on

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
Loss Ra(o
Flood Depth (cm)
Ground floor only Cellar and ground floor flooded Cellar only

CONSTRUCTING AN ADVANCED FLOOD VULNERABILITY CURVE
Single-
Component,
Engineering-
Based Approach
Country-Specific
Damage
Functions
Validated by
Claims Data
DamageRatio
Flood Depth

DIFFERENTIATION OF FLOOD VULNERABILITY
Property
Elevation
Threshold
Elevation
Basement and
Basement
Occupancies
Number of
Stories
Property
Age
Construction
Type
Private
Flood
Defenses

IMPACT OF EXPOSURE CHARACTERISTICS UPON LOSSES

SPECIAL TREATMENT OF INDUSTRIAL FACILITIES
PETROCHEMICAL/OIL REFINERY SEMICONDUCTOR FABRICATION FACILITY

POST-EVENT LOSS
AMPLIFICATION (PLA) CAN
PROVIDE AN ADDITIONAL
SOURCE OF LOSS

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

DETERMINING LOSSES IN REAL TIME IN THE AFTERMATH OF
FLOOD EVENTS
INLAND FLOOD RISK =

A STOCHASTIC EVENT THAT MATCHES
THE OBSERVED EVENT CLOSELY
ENOUGH FOR AN ACCURATE LOSS
ESTIMATE IS UNLIKELY TO EXIST

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

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

28Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016 2828Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. January 21, 2016
LESSONS LEARNED FROM
RECENT RECONNAISSANCE

THE 2013 CENTRAL EUROPEAN FLOODS –
HIGHLIGHTED THE NEED FOR GRANULAR EXPOSURE DATA
EXTERNAL DAMAGE INTERNAL DAMAGE

THE 2013 CENTRAL EUROPEAN FLOODS – OIL CONTAMINATION
LEADING TO WRITE-OFF
§  Loss exacerbated by the presence of oil contamination leads to demolition and reconstruction

DECEMBER 2015, STORM DESMOND FLOODS, U.K. - RESIDENTIAL
PROPERTY DAMAGE – DAMAGE TO BASEMENTS

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

DECEMBER 2015, STORM EVA FLOODS, U.K. –
CHALLENGES OF FLOOD FOOTPRINT DEVELOPMENT - YORK
River Foss
River Ouse
Flood gates

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

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

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 RMSRMS 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.
ABOUT RMSRMS 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.

Risk on the Rise: Counting the Cost of Inland Flooding

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Risk on the Rise: Counting the Cost of Inland Flooding