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:	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 DAMAGES RESPONSE TO DISASTER ENVIRONMENTAL DISASTER NEGOTIATION MEASURES DISASTER EVENTS EARTHQUAKES ECONOMIC CONDITIONS HURRICANES PROBABILITY DISTRIBUTION TSUNAMIS ECONOMIC ACTIVITY NATURAL PHENOMENA TECHNIQUES SPACE INVESTMENT BEHAVIOR TSUNAMI DEVELOPMENT ECONOMICS METHODOLOGIES CELLULAR PHONE VOLCANO DISASTER RESPONSE STORM SURGE NATURAL DISASTERS VOLCANIC ERUPTIONS MARKETS SCIENCES DISASTERS INDICATORS RESEARCH CLIMATE CHANGE CYCLONES FARMERS DUST BOWL MODELING VOLCANOES FINANCE HEAT WAVES LAND USE CLIMATE VARIABILITY REINSURANCE DROUGHTS TROPICAL CYCLONE EARTHQUAKE POLICY MAKERS DISASTER REDUCTION DISASTER RISK POLICIES SCIENCE DROUGHT VALIDITY VALUE BANK MEDICINE DISASTER RISK FINANCING FALLOUT IMPACT OF DISASTERS CLIMATE FIELD RESEARCH RISK EXPOSURE RESEARCHERS DAMAGE SIZE DISASTER‐PRONE AREAS MARKET ENVIRONMENTAL CATASTROPHE FLOOD PHYSICAL DAMAGES POLICY INSURANCE THEORY BUILDING CODES ESTIMATING RISK DISASTER TYPE TROPICAL CYCLONES FATALITIES SURVEY DATA ESTIMATES METHODOLOGY ERUPTIONS NATURAL HAZARDS TYPHOONS RECONSTRUCTION
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
_version_	1764450525647994880

Linking Risk Models to Microeconomic Indicators

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