Probabilistic Wind Risk Assessment Induced by Hurricanes on Economically Vulnerable Households in Mexico

AbstractThe economically vulnerable households in Mexico are used as an illustrative case study to present wind risk assessment induced by hurricanes, in which the risk parameters are assessed in an event-based probabilistic framework using a set of hazardous events integrated probabilistically, inc...

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Bibliographic Details
Published in:Natural hazards review 2018-08, Vol.19 (3)
Main Authors: Jaimes, Miguel A, Niño, Mauro
Format: Article
Language:English
Subjects:
Case studies
Economics
Forestry
Frameworks
Frequency dependence
Hazards
Households
Hurricanes
Insurance
Natural disasters
Randomness
Risk assessment
Spatial distribution
Stochasticity
Technical Papers
Vulnerability
Wind
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Summary:AbstractThe economically vulnerable households in Mexico are used as an illustrative case study to present wind risk assessment induced by hurricanes, in which the risk parameters are assessed in an event-based probabilistic framework using a set of hazardous events integrated probabilistically, including all uncertainties related to hazard, vulnerability, and risk assessment. The hazard is defined as a stochastic set of events that describes the spatial distribution, the annual frequency, and the randomness of the hazard intensity. The structural vulnerability is defined, for specific dwelling types, in terms of the expected damage and its corresponding standard deviation. The risk is expressed in four different economic terms: (1) expected loss for a single event, (2) average annual loss as a percentage of the reconstruction cost of the exposed asset, (3) pure premium, and (4) loss exceedance curve. It is observed that the expected annual loss for this type of dwelling in Mexico is approximately USD 39.06 million, and the probable maximum loss associated with a return period of 1,500 years is approximately USD 1,181 million. It is concluded that these quantitative metrics are of particular importance, especially to define risk transfer or retaining schemes, such as that employed by the Mexican Insurance Commission, which uses a 1,500-year return period to fix the solvency of insurance companies in Mexico, the Natural Disaster Fund, FONDEN, or a Catastrophe bond (CAT bond), used by the Mexican government.
ISSN:1527-6988
1527-6996
DOI:10.1061/(ASCE)NH.1527-6996.0000299