What is a risk in natural disasters

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NATHAN Risk Suite - Munich Re

What is risk?

In the context of natural disasters, the scientific community agrees that risk is the product of (the probability of) a hazard and its adverse consequences. Where there are no people or values that can be affected by a natural phenomenon, there is no risk. Similarly, an event is only termed a catastrophe if people are harmed and/or their possessions damaged.

What is risk? The intensity and frequency of a natural phenomenon (Hazard) is only one of three factors which determine the overall risk. The amount of values present in the area concerned (Exposure) as well as their loss susceptibility (Vulnerability) are crucial for the resulting risk. Hence, the risk formula can be written as a function of these three quantities. With regard to the insured risk, a fourth factor, insurance penetration, also plays a role.

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How does risk change? Click on the interactive graph below the grey box to view how [H], [E] and [V] combine to produce [R].


All factors that determine the risk are variable. While we cannot influence occurrence and intensity of a natural phenomenon, we may control the exposure by avoiding hazard-prone areas. Vulnerability can be reduced by increasing the structural resistance of objects, with measures depending on specific hazards. A higher insurance penetration generally increases the geographical spread of risks, but may also increase the probability of higher accumulation losses.

See for yourself: Move up and down the coloured pointers above to find out how they impact risk.

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