Weather and Climate Extremes in a Changing Climate. Regions of ...

The U.S. Climate Change Science Program Chapter 1
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BOX 1.6: Tools for Assessing Impacts of Climate Extremes
There are a variety of impact tools that help translate climate information into an assessment of what the impacts
will be and provide guidance on how to plan accordingly. These tools would be part of the filter/medium circle in
Figure 1.11. However, as illustrated here, using the example of a catastrophe risk model, the tool has clear linkages
to all the other boxes in Figure 1.11.
A catastrophe risk model can be divided into four main components, as shown in Figure Box 1.6. The hazard
component provides information on the characteristics of a hazard. For probabilistic calculations, this component
would include a catalog with a large number of simulated events with realistic characteristics and frequencies.
Event information for each hazard would include the frequency, size, location, and other characteristics. The overall
statistics should agree with an analysis of historical events.
The inventory component provides an inventory of structures that are exposed to a hazard and information on their
construction. The vulnerability component simulates how structures respond to a hazard. This component requires
detailed information on the statistical response of a structure to the forces produced by a hazard. This component
would also account for secondary damage such as interior water damage after a structure’s windows are breached.
The fourth component in the risk model estimates losses produced by a hazard event and accounts for repair or
replacement costs. In cases of insurance coverage, the loss component also accounts for business interruption costs
and demand surge. If the model is used for emergency management purposes, the loss component also accounts for
factors such as emergency supplies and shelters.
It should be noted, though, that how the loss component is treated impacts the vulnerability and inventory components,
as indicated by the curved upward pointing arrows. Is a house destroyed in a flood rebuilt in the same location or on
higher ground? Is a wind-damaged building repaired using materials that meet higher standards? These actions have
profound effects on future catastrophe risk models for the area.
Figure Box 1.6 Schematic diagram of a typical risk model used by the insurance industry.
The diagram highlights the three major components (hazard, damage, and loss) of
a risk model. What happens to the loss component feeds back to the vulnerability and
inventory components.