Linking Risk Models to Microeconomic Indicators

Catastrophe risk models are quantitative models used to estimate probabilistic loss distributions for a specified range of assets subject to a baseline level of disaster risk. While cat risk models are used extensively by the insurance and reinsura...

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Main Authors: Anttila‐Hughes, Jesse, Sharma, Mohan
Format: Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2015
Subjects:
Online Access:http://documents.worldbank.org/curated/en/2015/07/24744806/linking-risk-models-microeconomic-indicators
http://hdl.handle.net/10986/22235
id okr-10986-22235
recordtype oai_dc
spelling okr-10986-222352021-04-23T14:04:07Z Linking Risk Models to Microeconomic Indicators Anttila‐Hughes, Jesse Sharma, Mohan FLOODING IMPACTS OF CLIMATE CHANGE RISKS VARIABILITY ENVIRONMENTAL ECONOMICS ECONOMIC GROWTH STORM DISASTER TYPES TIME WIND SPEED RESEARCH WORKING PAPERS INCOME INSURANCE MARKETS CATASTROPHIC NATURAL DISASTERS NATURAL SCIENCES FAT TAIL STORMS METHODOLOGICAL ISSUES PROBABILITY DISTRIBUTIONS BUILDING CODE PORTFOLIO POLICY RESPONSE CYCLONE INTENSITY MANMADE DISASTER EFFECTS OUTBREAKS DISASTER MODELS PROBABILITY DISTRIBUTIONS DAMAGES RESPONSE TO DISASTER ENVIRONMENTAL DISASTER NEGOTIATION MEASURES DISASTER EVENTS EARTHQUAKES ECONOMIC CONDITIONS HURRICANES PROBABILITY DISTRIBUTION TSUNAMIS ECONOMIC ACTIVITY NATURAL PHENOMENA POLICY RESPONSE TECHNIQUES SPACE INVESTMENT BEHAVIOR TSUNAMI DEVELOPMENT ECONOMICS METHODOLOGIES CELLULAR PHONE VOLCANO DISASTER RESPONSE INSURANCE MARKETS STORM SURGE NATURAL DISASTERS VOLCANIC ERUPTIONS MARKETS CELLULAR PHONE SCIENCES DISASTERS INDICATORS RESEARCH CLIMATE CHANGE CYCLONES CYCLONE INTENSITY FARMERS DUST BOWL ENVIRONMENTAL ECONOMICS MODELING VOLCANOES FINANCE HEAT WAVES STORM SURGE LAND USE CLIMATE VARIABILITY REINSURANCE DROUGHTS TROPICAL CYCLONE EARTHQUAKE POLICY MAKERS DISASTER REDUCTION CLIMATE CHANGE DISASTER RISK POLICIES SCIENCE DROUGHT VALIDITY VALUE POLICY MAKERS BANK MEDICINE DISASTER RISK FINANCING FALLOUT IMPACT OF DISASTERS CLIMATE FIELD RESEARCH HEAT WAVES DISASTER EVENTS RISK EXPOSURE RESEARCHERS DAMAGE IMPACT OF DISASTERS SIZE DISASTER‐PRONE AREAS BUILDING CODE FIELD RESEARCH MARKET ENVIRONMENTAL CATASTROPHE FLOOD PHYSICAL DAMAGES POLICY INSURANCE THEORY RESPONSE TO DISASTER BUILDING CODES ESTIMATING RISK DISASTER TYPE BUILDING CODES TROPICAL CYCLONES FATALITIES DISASTER‐PRONE AREAS SURVEY DATA DEVELOPMENT ECONOMICS IMPACTS OF CLIMATE CHANGE ESTIMATES DISASTER RISK FINANCING METHODOLOGY FAT TAIL ERUPTIONS NATURAL HAZARDS WIND SPEED TYPHOONS DISASTER TYPE RECONSTRUCTION ECONOMIC CONDITIONS ENVIRONMENTAL DISASTER NATURAL DISASTERS Catastrophe risk models are quantitative models used to estimate probabilistic loss distributions for a specified range of assets subject to a baseline level of disaster risk. While cat risk models are used extensively by the insurance and reinsurance industry to estimate expected losses to insured assets, their ability to estimate damages outside of a narrow range of physical assets such as buildings or infrastructure is still limited. This paper first provides a brief outline of cat risk models as they currently exist, and then outlines the major econometric issues involved in incorporating research from the growing literature on the microeconomic impacts of disasters into a cat model framework. Attention is specifically drawn to issues arising from the generally low recurrence frequencies of disasters, the likely role of difficult-to-document indirect damages in influencing total disaster costs, and issues related to generalizing disaster response functions across different domains. The paper ends by noting the large discrepancy between the current state of the literature on disaster impacts on microeconomic indicators and the level needed for adequate cat risk model performance, and suggests means of closing that gap as well as potential areas for future research. 2015-07-20T15:23:12Z 2015-07-20T15:23:12Z 2015-07 Working Paper http://documents.worldbank.org/curated/en/2015/07/24744806/linking-risk-models-microeconomic-indicators http://hdl.handle.net/10986/22235 English en_US Policy Research working paper,no. WPS 7359; Policy Research Working Paper;No. 7359 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic FLOODING
IMPACTS OF CLIMATE CHANGE
RISKS
VARIABILITY
ENVIRONMENTAL ECONOMICS
ECONOMIC GROWTH
STORM
DISASTER TYPES
TIME
WIND SPEED
RESEARCH WORKING PAPERS
INCOME
INSURANCE MARKETS
CATASTROPHIC NATURAL DISASTERS
NATURAL SCIENCES
FAT TAIL
STORMS
METHODOLOGICAL ISSUES
PROBABILITY DISTRIBUTIONS
BUILDING CODE
PORTFOLIO
POLICY RESPONSE
CYCLONE INTENSITY
MANMADE DISASTER
EFFECTS
OUTBREAKS
DISASTER
MODELS
PROBABILITY DISTRIBUTIONS
DAMAGES
RESPONSE TO DISASTER
ENVIRONMENTAL DISASTER
NEGOTIATION
MEASURES
DISASTER EVENTS
EARTHQUAKES
ECONOMIC CONDITIONS
HURRICANES
PROBABILITY DISTRIBUTION
TSUNAMIS
ECONOMIC ACTIVITY
NATURAL PHENOMENA
POLICY RESPONSE
TECHNIQUES
SPACE
INVESTMENT BEHAVIOR
TSUNAMI
DEVELOPMENT ECONOMICS
METHODOLOGIES
CELLULAR PHONE
VOLCANO
DISASTER RESPONSE
INSURANCE MARKETS
STORM SURGE
NATURAL DISASTERS
VOLCANIC ERUPTIONS
MARKETS
CELLULAR PHONE
SCIENCES
DISASTERS
INDICATORS
RESEARCH
CLIMATE CHANGE
CYCLONES
CYCLONE INTENSITY
FARMERS
DUST BOWL
ENVIRONMENTAL ECONOMICS
MODELING
VOLCANOES
FINANCE
HEAT WAVES
STORM SURGE
LAND USE
CLIMATE VARIABILITY
REINSURANCE
DROUGHTS
TROPICAL CYCLONE
EARTHQUAKE
POLICY MAKERS
DISASTER REDUCTION
CLIMATE CHANGE
DISASTER RISK
POLICIES
SCIENCE
DROUGHT
VALIDITY
VALUE
POLICY MAKERS
BANK
MEDICINE
DISASTER RISK FINANCING
FALLOUT
IMPACT OF DISASTERS
CLIMATE
FIELD RESEARCH
HEAT WAVES
DISASTER EVENTS
RISK EXPOSURE
RESEARCHERS
DAMAGE
IMPACT OF DISASTERS
SIZE
DISASTER‐PRONE AREAS
BUILDING CODE
FIELD RESEARCH
MARKET
ENVIRONMENTAL CATASTROPHE
FLOOD
PHYSICAL DAMAGES
POLICY
INSURANCE
THEORY
RESPONSE TO DISASTER
BUILDING CODES
ESTIMATING
RISK
DISASTER TYPE
BUILDING CODES
TROPICAL CYCLONES
FATALITIES
DISASTER‐PRONE AREAS
SURVEY DATA
DEVELOPMENT ECONOMICS
IMPACTS OF CLIMATE CHANGE
ESTIMATES
DISASTER RISK FINANCING
METHODOLOGY
FAT TAIL
ERUPTIONS
NATURAL HAZARDS
WIND SPEED
TYPHOONS
DISASTER TYPE
RECONSTRUCTION
ECONOMIC CONDITIONS
ENVIRONMENTAL DISASTER
NATURAL DISASTERS
spellingShingle FLOODING
IMPACTS OF CLIMATE CHANGE
RISKS
VARIABILITY
ENVIRONMENTAL ECONOMICS
ECONOMIC GROWTH
STORM
DISASTER TYPES
TIME
WIND SPEED
RESEARCH WORKING PAPERS
INCOME
INSURANCE MARKETS
CATASTROPHIC NATURAL DISASTERS
NATURAL SCIENCES
FAT TAIL
STORMS
METHODOLOGICAL ISSUES
PROBABILITY DISTRIBUTIONS
BUILDING CODE
PORTFOLIO
POLICY RESPONSE
CYCLONE INTENSITY
MANMADE DISASTER
EFFECTS
OUTBREAKS
DISASTER
MODELS
PROBABILITY DISTRIBUTIONS
DAMAGES
RESPONSE TO DISASTER
ENVIRONMENTAL DISASTER
NEGOTIATION
MEASURES
DISASTER EVENTS
EARTHQUAKES
ECONOMIC CONDITIONS
HURRICANES
PROBABILITY DISTRIBUTION
TSUNAMIS
ECONOMIC ACTIVITY
NATURAL PHENOMENA
POLICY RESPONSE
TECHNIQUES
SPACE
INVESTMENT BEHAVIOR
TSUNAMI
DEVELOPMENT ECONOMICS
METHODOLOGIES
CELLULAR PHONE
VOLCANO
DISASTER RESPONSE
INSURANCE MARKETS
STORM SURGE
NATURAL DISASTERS
VOLCANIC ERUPTIONS
MARKETS
CELLULAR PHONE
SCIENCES
DISASTERS
INDICATORS
RESEARCH
CLIMATE CHANGE
CYCLONES
CYCLONE INTENSITY
FARMERS
DUST BOWL
ENVIRONMENTAL ECONOMICS
MODELING
VOLCANOES
FINANCE
HEAT WAVES
STORM SURGE
LAND USE
CLIMATE VARIABILITY
REINSURANCE
DROUGHTS
TROPICAL CYCLONE
EARTHQUAKE
POLICY MAKERS
DISASTER REDUCTION
CLIMATE CHANGE
DISASTER RISK
POLICIES
SCIENCE
DROUGHT
VALIDITY
VALUE
POLICY MAKERS
BANK
MEDICINE
DISASTER RISK FINANCING
FALLOUT
IMPACT OF DISASTERS
CLIMATE
FIELD RESEARCH
HEAT WAVES
DISASTER EVENTS
RISK EXPOSURE
RESEARCHERS
DAMAGE
IMPACT OF DISASTERS
SIZE
DISASTER‐PRONE AREAS
BUILDING CODE
FIELD RESEARCH
MARKET
ENVIRONMENTAL CATASTROPHE
FLOOD
PHYSICAL DAMAGES
POLICY
INSURANCE
THEORY
RESPONSE TO DISASTER
BUILDING CODES
ESTIMATING
RISK
DISASTER TYPE
BUILDING CODES
TROPICAL CYCLONES
FATALITIES
DISASTER‐PRONE AREAS
SURVEY DATA
DEVELOPMENT ECONOMICS
IMPACTS OF CLIMATE CHANGE
ESTIMATES
DISASTER RISK FINANCING
METHODOLOGY
FAT TAIL
ERUPTIONS
NATURAL HAZARDS
WIND SPEED
TYPHOONS
DISASTER TYPE
RECONSTRUCTION
ECONOMIC CONDITIONS
ENVIRONMENTAL DISASTER
NATURAL DISASTERS
Anttila‐Hughes, Jesse
Sharma, Mohan
Linking Risk Models to Microeconomic Indicators
relation Policy Research working paper,no. WPS 7359;
description Catastrophe risk models are quantitative models used to estimate probabilistic loss distributions for a specified range of assets subject to a baseline level of disaster risk. While cat risk models are used extensively by the insurance and reinsurance industry to estimate expected losses to insured assets, their ability to estimate damages outside of a narrow range of physical assets such as buildings or infrastructure is still limited. This paper first provides a brief outline of cat risk models as they currently exist, and then outlines the major econometric issues involved in incorporating research from the growing literature on the microeconomic impacts of disasters into a cat model framework. Attention is specifically drawn to issues arising from the generally low recurrence frequencies of disasters, the likely role of difficult-to-document indirect damages in influencing total disaster costs, and issues related to generalizing disaster response functions across different domains. The paper ends by noting the large discrepancy between the current state of the literature on disaster impacts on microeconomic indicators and the level needed for adequate cat risk model performance, and suggests means of closing that gap as well as potential areas for future research.
format Working Paper
author Anttila‐Hughes, Jesse
Sharma, Mohan
author_facet Anttila‐Hughes, Jesse
Sharma, Mohan
author_sort Anttila‐Hughes, Jesse
title Linking Risk Models to Microeconomic Indicators
title_short Linking Risk Models to Microeconomic Indicators
title_full Linking Risk Models to Microeconomic Indicators
title_fullStr Linking Risk Models to Microeconomic Indicators
title_full_unstemmed Linking Risk Models to Microeconomic Indicators
title_sort linking risk models to microeconomic indicators
publisher World Bank, Washington, DC
publishDate 2015
url http://documents.worldbank.org/curated/en/2015/07/24744806/linking-risk-models-microeconomic-indicators
http://hdl.handle.net/10986/22235
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