3 rd International Workshop on Global Flood Monitoring & Modelling Assessing Global Flood Hazards: Engineering and Insurance Applications March 6, 2013 Ed Beighley and Jeff McCollum Hydrological Sciences Research FM Global, Norwood MA

Economic Impact of Floods in 2011 (total economic losses; not only insured losses)  Global flood losses >$100 Billion –Largest global losses: Thailand (Jun-Nov) $40-50B Australia (Jan-Feb) $20-30B  US flood losses >$14 Billion –Largest US loss: Hurricane Irene (Aug) $5-10B

 Industrial, Commercial and Residential –100’s Millions of locations –$100’s Trillions in total value –$Billions at individual locations –Annual flood losses: >$10 to >$100 Billion Physical damage and business interruption Only ~25-50% of losses insured Insured losses essentially covered by entire private sector through annual premiums Global Private Sector Property Summary

 Flooding major concern in many emerging markets –Risks based on flood exposure and economic growth –Thailand (2011 flood losses of $40-50B) only ranks 7 th –Highest risk regions where streamflow data are limited Global Private Sector Property Summary Source: Swiss Re, “Natural catastrophes and man-made disasters in 2011: historic losses surface from record earthquakes and floods”, Sigma No 2/2012. Risk Rank (high to low)

 $Billions can be exposed at single locations –Physical Damage & Business Interruption  Commonly grouped together in Industrial Parks –Potential for large aggregate losses (ex., Thailand)  Supply chain disruption –Disasters 1000’s of miles away can have major impacts  Limited data on global/regional flood correlations –Ex., What is likelihood of significant flooding in Eastern US & Western Europe in a given year or season? Floods are significant concern Commercial and Industrial Sectors

Industrial Complex Bangkok, Thailand October 20, (Paula Bronstein /Getty Images) (Christophe Archambault/AFP/Getty Images)

Engineering and Insurance Applications Integration of remote sensing & modeling can improve or redefine many current activities  Planning\Engineering –Quantify site, regional and global flood exposures –Design sites\systems to mitigate potential losses –Develop Flood Emergency Action Plans to minimize losses  Management\Forecasting –Characterize resilience of supply\distribution chains –Define potential worst case scenarios –Allocate resources to cover potential losses –Determine current and/or future (short- & long-term) conditions (rivers, reservoirs/lakes, oceans) to drive/improve Flood Emergency Action Plans

Understanding Flood Risk – “At a Site”  If exposed to flood: –Determine potential losses  policy coverage/limits –Develop engineering solutions to minimize flood risk –Develop Flood Emergency Response Plan –$$ to implement risk improvements –Low flood limits in policy (ex., $1’s to 10’s Millions) –$$ for additional coverage; $$ for re-insurance  If not exposed to flood: –Assume no potential losses –Very high flood limits (ex., 100’s Millions)

Understanding Flood Risk – “At a Site”  Sample X-yr flood map; shaded by water depth (shallow-blue to deep-red)  Challenge to validate hydraulic model producing continuous water surface w/ point measurements  Will these locations flood? Station (m) Water Level (m) gauge location Discharge (m 3 /s) Water Level (m)

Understanding Flood Risk – “At a Site” Y-yr WSE X-yr WSE Range of conditions measured over mission periods Current/future efforts (DFO/JRC/MODIS/TRMM/GPM/SWOT) provide:  Water surface extent/elev. (2D flood map) for a range of discharges;  Initial conditions (lake/reservoir stores, river levels/Q’s, soil moisture, snow, GW, coastal ocean levels) and rainfall (spatial/temporal)  Knowledge from sampled events improves/enables estimates for potential larger flood events Hydro ConditionProbability

Understanding Flood Risk – “Global to Local ”  Satellites/Models provide consistent data for ??? km of river reaches, of which many (???%) river reaches are needed for Engineering and Insurance Applications  Can lead to X-yr flood hazard meaning same everywhere  Help in aggregate analyses at Global, Regional& Local scales

Need to know real flood hazards  If flood model/map says exposed but NOT exposed: –Companies pay for unneeded flood risk mitigation –Companies pay for unneeded flood coverage –Companies pay higher insurance premiums  If flood model/map says not exposed but exposed: –Insurers cover whole loss  higher future rates –Facilities not ready for flooding  higher losses –Unexpected downtime can lead to loss of market share  difficult or impossible to fully recover

 Private Sector  Floods are significant concern –Annual flood losses can exceed $100 Billion physical damage (local) business interruption (local/regional/global) –Many emerging markets in high flood risk regions  Satellites/Models  “Consistent” global river data –Ensure X-yr flood hazard means same thing everywhere –Improve understanding of flood correlations Are supply/distribution chains adequate? What are potential aggregate losses?  Satellites/Models  “Primary” source of river data –Improve hazard understanding –Develop better mitigation measures Engineering & Insurance Applications Summary can save Private Sector $Billions/year