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Presentations – Session 1 OECD Conference on the Financial Management of Flood Risk Building financial resilience in a changing climate PRESENTATIONS – SESSION 1 12-13 May 2016 Paris, France OECD CONFERENCE ON THE FINANCIAL MANAGEMENT OF FLOOD RISK: PARIS, MAY 12-13TH 2016 THE EVOLVING NATURE OF FLOOD RISK (INTRODUCTION) Robert Muir-Wood RMS Chief Research Officer Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 1 DIFFERENT CLASSES OF FLOODS Pluvial Fluvial Ice Dam Groundwater Storm Surge Damburst Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 2 FLOODS ARE NATURAL… Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 3 BUT FLOOD RISK IS PREDOMINATELY MAN MADE Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 4 Thailand: 1990-2010 Industry Cluster Development Policy & 2011 Rainfall Wanted Large Areas of Cheap, Flat, Previously Undeveloped, Land. Close to Bangkok Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 5 Thailand: 1990-2010 Industry Cluster Development Policy & 2011 Rainfall Wanted Large Areas of Cheap, Flat, Previously Navanakorn Industrial Estate Undeveloped, Land. Hi-Tech Industrial Estate Close to Bangkok Bang Pa-in Industrial Estate Copyright © 2016 Risk ManagementRojana SolutionIndustrials, Inc. Estate All Rights Reserved. May 4, 2016 6 COAST SPECIFIC EXPOSURE CATEGORIES PORTS HOTELS & CONDOS POWER PLANTS AIRPORTS REFINERIES MARINAS Copyright © 201420162015 Risk Management Solutions,Solutions, Inc.Inc All Rights Reserved. May 4, 2016 7 HOW PRICES FOR IDENTICAL HOUSES INCREASE AT THE COAST Data from Stone Harbor and Avalon, New Jersey 3 2002/2003 2.5 2 1.5 1 0.5 http://www.gradschool.psu.edu/diversity/ mcnair/papers2003/majorpdf/ 0 >2 blocks 2 blocks bayfront beach oceanfront back back block Copyright © 20142016 Risk Management Solutions,Solutions, Inc.Inc All Rights Reserved. May 4, 2016 8 THE MASS PRODUCTION OF COAST Copyright © 2016 Risk Management SolutionSolutions,s, Inc. All Rights Reserved. May 4, 2016 9 WHAT DETERMINES FLOOD INSURANCE? Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 10 HOW THE 1927 MISSISSIPI FLOODS ENDED U.S. PRIVATE FLOOD INSURANCE Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 11 REACTIVE RISK MANAGEMENT: • RAISED FLOOD DEFENCES AT THE 7 FLOODED THAI INDUSTRIAL PARKS IN 2012 Bang-Pa Bangkadi •Reinforced defences raised 1.5-2.0m •Demanded by lead Japanese Industries •Funded by $200m in soft loans from the Government •Single site flood risk is now beyond 500 year RP •No protection for the labour- Rojana Navanakorn force or supply lines ©2013Copyright Risk © 2016Management Risk Management Solutions, Solution s,Inc. Inc. All Rights Reserved. ConfidentialMay 4, 2016 1122 FLOOD INSURANCE AND CORRELATED RIVER FLOODING IN THE UK Proportion of gauges on network with >50 year flow in a single event 18% 16% The Gentleman’s Agreement 14% 12% 10% 8% 6% 4% 2% Porportion of gauges 0% Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 13 ANNUAL EUROPEAN WIND & FLOOD INSURANCE LOSSES Above average Wind Below average Above average Flood Below average 1980 1990 2000 2010 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 14 Europe IED All Lines Ground Up ‰ Loss Cost Generally higher LCs in mountainous or hilly terrain Copyright © 20162015 Risk Management SolutionSolutions,s, Inc. All Rights Reserved. May 4, 2016 15 High resolution hazard maps to support technical flood underwriting 2m RMS RP FL map of London • Flood hazard high-resolution maps: • UK 2m • Continental Europe 5m • 7 return periods, 13 flood depth bands • Provide Extent and Depth of flooding • Undefended and defended Flood risk cost can vary by 100+% for adjacent buildings Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 16 DYNAMICALLY MODELLED EFFECT OF DEFENCES MULTI-COUNTRY PORTFOLIO Standard of Protection (SoP) 1 SoP+100% No Fluvial defenses SoP - 50% SoP+50% Original SoP Default SoP 10 SoP + 50% SoP + 100% SoP-50% Infinite fluvial defenses SoP=0 RP [year] [year] RP 100 1000 0 1 2 42 3 6 4 8 10121416182022 5 6 7 8 9 10 11 1224 Loss (bn) Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 17 IS CLIMATE CHANGE ALTERING THE OCCURRENCE OF EXTREMES? Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 18 20,000 years of climate simulation ATTRIBUTION STUDIES Without post 1950 With post-1950 increase in GHGs increase in GHGs Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 19 Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 20 ATTRIBUTION STUDIES VS CHANGES IN OVERALL RISK (UK FLOOD) Increased risk Decreased risk v v Storm Desmond 2015 record Snow-thaw floods March 1947 warm December at the end of record cold winter Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 21 EVOLUTION OF DIFFERENT CLASSES OF FLOODS Pluvial Fluvial Ice Dam Urbanisation Development Rainfall & Expanded Warmer Intensification Protections Winters Wetter Coastification Ageing Winters Intensification Infrastructure Groundwater Storm Surge Damburst Copyright © 2016 Risk Management Solutions, Inc. All Rights Reserved. May 4, 2016 22 Aspects of flood risk Wolfgang Kron Geo Risks Research/Corporate Climate Centre OECD Conference on the Financial Management of Flood Risk – Paris 12 May 2016 Overall losses: US$ 13bn Tens of thousands of pilgrims Insured losses: US$ 3bn were forced to stay in the cold Deaths: 25 Recent mountains for many days. 5,500 deaths large Central Europe, June 2013 flood Uttarakhand/India, June 2013 Overall losses: US$ 10bn Insured losses: US$ 700m disasters Deaths: >6,000 Overall losses: US$ 43bn Destroyed/damaged Overall losses: US$ 1.5bn Insured losses: US$ 10bn buildings: 1,200,000 Insured losses: US$ 500m • largest river flood loss ever Deaths: 31 • worldwide effects (losses) Philippines, Nov. 2013 (Haiyan) Thailand, Sep. – Nov. 2011 Atacama-Desert Chile, March 2015 Flood disasters Increase in number of events Inland flood losses 1980 – 2015 (only events with inflation- adjusted loss >US$ 50m are shown) Munich Re NatCatSERVICE, 2016 Flood disasters Increase in losses Inland flood losses 1980 – 2015 (only events with inflation- adjusted loss >US$ 50m are shown) Munich Re NatCatSERVICE, 2016 Flood disasters Increase in insured losses Inland flood losses 1980 – 2015 (only events with inflation- adjusted loss >US$ 50m are shown) Munich Re NatCatSERVICE, 2016 Flood disasters Trends in Peak discharges Losses 100.100.0000.00 000 80.08080.000 0 660.060.0000 40.040.000.000 20.02020.000 0.00.000 8 1 9 26 998 00 0 926 932 1926 1929 1932 1935 1938 1941 1944 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 1998 2001 2001 1926 19 1929 1929 1932 1932 1935 1938 1941 1944 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 Keyword: Climate change Loss trends do not always reflect the true risk. What is Risk? Definition Hazard H Risk = f [ Exposure E ] R = H x E x V Vulnerability V Changes in Upper Rhine Valley prior to 1800 environmental conditions Æ Influences on flood peak and wave propagation Upper Rhine Valley today Changes in landuse Æ Creation of loss potential Development on flood plains Population development (Example Florida) 1920 2000 2020 Inhabitants 100 000 15 000 000 25 000 000 Tourists 0 45 000 000 85 000 000 Sources:SSourcercerccess:: http://www.awesomeflorida.com/history.htmhttp:://ww/wwwwwwwwwww.awww.a wwewesesssosomeoomeommemeflorfflflofloridllorloooridridriddacoaa.caca.ccoomomm//hihhistohistorhistisisstttotoroorryy.hyh.hhthtmtmm (http://www.esig.ucar.edu/rp_senate)(http:http://w//wwwwwwwwww.ww..eseesigesissigiigg.ug ucacaarar.er.er.eeeddu/u/ru//rprprpp__ seenateenaennanaatttee)e) - WendlerWWeWendleendlendendleenendlendndled erCr Collection;CCollCoolloolllllececteectioectionctctionttiotionioonon; RogRRoRogerooggerrP PielkePPiPieieielkkee http:\\www.http:httptpp:\\wwwwwwwwwww.ww.. worldweb.com;woororldwerldldwedwedwweebb.b.cccooommm;; http://www.napa.ufl.edu/98news/bioland.htmhhtthtttttptpp::/:///wwwwwwwwwwww.nwn.naapppapa.a uuffleledl.eedduduu//99898ne8n88newnenewsneewewswwss/b/bio/biobbiioololalaanndnd.hd.h htmhhttmm http://www.bettertransportation.org/Issues/1999/additional_funding.htmhttp:///wwwwwwww.bww..bbeetteetttttteertererttrarannnsponspsspopoortrtatataatiotit onn.on..oorg/orgrg/g/IIsssuesssuessuessuesueueseses//1999//1999/1/191999199119999999999/9999/9/addaadadditiaddidddddidditditit onaloonal_fonaonal_naalal_ fuunundnnddiningng..hthhttmtm Values inside of buildings (Example: basement) In former times Today - Laundry room - Electrical washing machines - Coal, wood cellar - Hobby rooms - Storage rooms - Party cellars - Potatoes - Wall-to-wall carpets - Preserves - Computers, TV sets, stereos - Old bicycle - Electrical distribution boxes - Junk - Control devices for air condition/elevators - . - Computer centers - Storages - . HighSchlamm vulnerability auf Printplatte Flood control – prevention – protection Reduce the risk Flood control – prevention – protection . ., but trust in technical contollability of natural events may generate a false feeling of security. Consequence: values in protected areas may increase immensely. Climate change Climate change is mainly manifested in WATER-related
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