Flood Risk = Hazard • Values • Vulnerability

TLDR

Flooding is the leading cause of natural‑event losses worldwide, affecting every region, and its risk depends on hazard, exposed values, and vulnerability, so protection measures and insurance are essential to reduce financial impacts. The study aims to help insurers estimate the probable maximum losses from extreme flood events. Demand for flood insurance has increased in recent years.

Abstract

Abstract Worldwide, flooding is probably the number one cause of losses from natural events. No region in the world is safe from being flooded. As the flood risk is a function of the flood hazard, the exposed values and their vulnerability, the increase in flood losses must be attributed to changes in each of these aspects. While flood protection measures may reduce the frequency of inundation losses, appropriate preparedness measures lessen the residual financial risk considerably. Besides public and private measures, insurance is a key factor in reducing the financial risk for individuals, enterprises, and even whole societies. In recent years, the demand for flood insurance has been growing. This is forcing the insurance industry to develop appropriate solutions. At the same time it is vital for the insurers to know the probable maximum losses they might face as the result of an extreme event.