Introduction to Catastrophe Risk Modelling

Abstract

We live in a complex and risky world. This course provides state-of-the-art tools to quantify catastrophe risk for various perils, both natural (e.g. earthquakes, storms, wildfires, epidemics) and man-made (e.g. industrial accidents, blackouts). It covers both theoretical and practical aspects of risk modelling, including hazard and loss assessment, as well as various risk management strategies.

Objective

After taking this course, students will be able to: •Understand the physical and statistical characteristics of the following perils: extra-terrestrial, geological & geomorphological, meteorological, hydrological, bio-physical & ecological, technological, and socio-economic. •Assess hazard and risk probabilistically, following standard methods used by reinsurers, CAT risk model vendors and civil protection agencies. This includes event size-frequency analysis, severity/damage/loss mapping, hazard and loss metrics usage. •Model the dynamics of catastrophes by using cellular automata (wildfire, landslide, blackout, social unrest), system dynamics (epidemics, crop failure), clustering (earthquakes, storms), Markov chains (domino effects) and long-term trends (global warming, resource depletion), as well as Bayesian inference for forecasting. •Turn results of CAT risk models into risk management solutions, by understanding risk transfer instruments such as insurance and bonds, as well as risk reduction instruments. Understand how risk is perceived by different stakeholders (utility theory) and how to communicate risk. •Compute hazard and risk using R and/or Python programming, data management and simulation strategies. Develop a CAT risk model from scratch for one peril of the student’s choice, and report on the findings. •Develop critical thinking, pragmatism, a top-down view on problem solving, first physical principles, and teamwork (via the CAT risk model project).

Content

This course is addressed to students with a science or engineering background and with an interest in the fundamental, societal and/or interdisciplinary aspects of catastrophe risk analysis. The material covered is very broad in scope, inventorying numerous types of perils, both natural and man-made, and providing basics of statistics, applied physics, earth sciences, civil engineering, and psychology. It remains however at the introductory level with a focus on the fundamental concepts, enough to comprehend the catastrophe phenomenology and risk quantification in a comprehensive manner. Catastrophe risk modelling deals with negative events, associated with economic and/or human losses. It is however a better understanding of the process which can save lives and mitigate damage. Zero-risk does not exist and if the catastrophes considered in such a course remain rare in the lifespan of one individual, they are an integral part of our society and of critical concern at that level. The student of risk aims at solving the important problems faced by our world due to natural and anthropogenic perils. Such endeavour must start with a better understanding of our intertwined environmental and engineered world system, which is the primary goal of this course.

Resources