Integrated Risks Transfer Mode of Large Scale Disasters in China and World

Integrated Risks Transfer Mode of Large Scale Disasters in China and World Peijun SHI State Key Laboratory of Earth Surface Processes and Resource Ecology Key Laboratory of Environmental Change and Natural Disaster, MOE Academy of Disaster Reduction and Emergency Management, MOCA & MOE China Plenary Lecture IDRC 2010, Davos, Switzerland, 3 June Beijing Normal University/IHDP-IRGP

Contents
Large-scale Disaster and Its Risk Assessment
Integrated Risks Transfer Mode of
Large Scale Disasters in China and World
Discussion

1 Large-scale Disaster and Its Risk Assessment

Indian Ocean tsunami, 2004 Katrina Hurricane, USA, 2005 Wenchuan Earthquake, China, 2008 Typhoon-Storm Disaster, Myanmar, 2008 Large-scale Disaster

Large-scale Disaster Snowstorm of Southern China,2008 Wenchuan Earthquake, 2008 Tangshan Earthquake, 1976 Yangtze River Flood, 1998

A serious disaster due to hazards encountered once in one century , causing huge human casualties and property losses and wide range of impact , which, upon occurring, cannot be independently coped with by the disaster areas and has to be aided by means of external forces
Generally speaking, such large-scale disasters will usually:
Standard of Large-scale Disaster Classification (Peijun SHI, 2009 )
total death of more than 10,000 persons
direct economic loss of more than 10 billion Euro
affected area of over 100,000km 2

Standard of Large-scale Disaster Classification Notes: (1) The standard for different disaster grades shall meet any two of the items for the index; (2) Dead population includes the population killed and population missing for more than 1 month; (3) The direct property loss means the value of properties actually damaged in the year due to the disaster; (4) Disaster area refers to the disaster area with human casualties or property loss or damaged ecological system due to the disaster. Index Type Intensity (frequency) Death Toll （ person ） Direct Economics Losses （ billon ） Disaster Area （ km 2 ） Large-Scale Disaster 7.0 （ magnitude ） or >1/100a ≧ 10,000 ≧ 1,000.0 ≧ 100,000.0 Big Disaster 6.5-7.0 （ magnitude ） Or 1/50a-1/100a 1,000-9,999 100.0-999.0 10,000.0-99,999.0 Medium Disaster 6.0-6.5 （ magnitude ） Or 1/10a-1/50a 100-999 10.0-99.0 1,000.0-9,999.0 Small Disaster <6.0 （ magnitude ） or < 1/10a ≤ 99 ≤ 9.0 ≤ 999.0

Major Features of Large-scale Disaster
Huge human casualties
Eg, China Wenchuan Earthquake in 2008 caused in total more than 80,000 victims, including 69,227 persons killed and 17,923 persons missing, and 374,600 injuries
High property losses
Eg, The Hurricane Katrina of USA in 2005 caused a loss of nearly 100 billion US dollars
Large-scale affected areas
Eg, The Indian Ocean Earthquake and the tsunami triggered thereof in late 2004 involved 15 countries along the coast of the Indian Ocean

Cases of Worldwide LSDs (1989-2009) Year Disaster Name Intensity (frequency) Death Toll (persons) Affected Area (10 4 km 2 ) Economic Losses (100M RMB) 1995 Kobe Earthquake Disaster in Japan 7.3 6,434 dead Approx. 12.0 7,175.0 1998 Yangtze River Basin Flood in China 1/50a-1/100a 1,562 persons dead 22.3 1,070.0 2003 SARS in China 1/50a-1/100a 336 persons dead Approx. 500.0 2,100.0 2003 European Heat Wave 1/50a-1/100a 37,451 persons dead Approx. 100.0 1,300.0 2004 Indian Ocean Earthquake-Tsunami Disaster 8.9 230,210 persons dead 45,752 persons missing 800km coastal line serious damaged, deep into the inland by 5km Approx. 70.0 2005 Hurricane Katrina in USA 1/100a 1,300 persons dead Approx. 40.0 Approx. 8,750.0 2005 Kashmir Earthquake in South Asia 7.6 About 80,000 persons dead Approx. 20.0 Approx. 350.0 2008 Burma Hurricane Disaster 1/50a-1/100a 78,000 persons dead 56,000 persons missing Approx. 20.0 Approx. 280.0 2008 Freezing Rain & Snow Disaster in Southern China 1/50a-1/100a 129 persons dead 4 persons missing Approx. 100.0 1516.5 2008 Wenchuan Earthquake Disaster in China 8.0 69,227 persons dead 17,923 persons missing Approx. 50.0 8,500.0-9,000.0

The Risk Assessment of Large-scale Disasters
Regional Multi-hazard Loss Assessment Model
Regional Disaster-chain Loss Assessment Model

“ multi-hazards” and “disaster chains” The “multi-hazards” refers to a succession of hazards that always co-exists and occurs at almost the same time and region . The “disaster chains” emphasizes the causal relationships among those hazards that usually vary in temporal duration and spatial extension of influence.

Regional Multi-hazard Loss Assessment Model For the given district D, at the time T 1 before disaster, the exposures’ values are: Population - PL 1 , Properties - PP 1 , Natural Resource Assets - NRA 1 ; while at time T 2 after disaster, the exposures’ values are PL 1 , PP 1 and NRA 1 . The total loss caused by multi-hazard can be expressed as following formula: D(T 1 ) D(T 2 ) The region’s social economic states before and after multi-disaster D(T 1 ) and D(T 2 ) represent the social economic states of the region in time T 1 and T 2 respectively, including the population, properties’ value, and amount of natural resource assets

Regional Multi-hazard Loss Assessment Model Based on above analysis, the total loss of multi-hazard in region D caused by A 1 , A 2 , B 1 , B 2 , C 1 , C 2 can be expressed as: Situation (1) Situation (2)

Regional Multi-hazard Loss Assessment Model
A Case of Regional Multi-hazard Loss Assessment

The Matrix Method of Hazard Causing and Disaster Forming multi-hazard risk in Europe JRC–Multi-risk Approach

Map of Comprehensive Urban Natural Disaster Intensity in China

Properties of Disaster-chain
Inducibility: the causal relationships among those hazards
Time Scale: usually vary in temporal duration
Spatial Scale: usually vary in spatial extension of influence

Loss Assessment by Areas and Hazards
Regional Disaster-chain Loss Assessment Model where, The total disaster chain loss is ： where, For the multi-hazard hit area, the multi-hazard overlapping assessment method is used, while for the single-hazard hit area, the single-hazard assessment method is used.

A Case of Regional Disaster-chain Loss Assessment
Wenchuan Earthquake Catastrophe of May 12, 2008

Wenchuan Earthquake
14:28 pm on May 12 of 2008 , a major earthquake measuring 8 Richter scale jolted Wenchuan County of Southwest China’s Sichuan province.
The most serious earthquake of China since 1949:
high intensity
large disaster affected area
serious frequent aftershocks and secondary disasters
the most difficulty of disaster relief
the most severe damage and loss

Wenchuan Earthquake, 2008

Assessment of Wenchuan Earthquake Disaster Chain Heavy Rain Rock Collapse Landslides Earthquake Barrier lakes Debris Flow

Disaster Index (DI)
The weight for each indicators:
Average magnitude of earthquake (0.3);
Number of deaths and missings, percentage of deaths and missings(0.3, 0.15 for each);
Number of collapsed houses per 10,000 persons (0.2, 0.1 for each);
Risk of geological disaster: impacted residents (0.1); Percentage of people relocated(0.1).
DI=∑(fk* DIk) DIk is the normalized indicator value ： DIk = [DIk –min(DIk)]/ [max(DIk)-min(DIk)] ； fk is the weight for each indicator

Assessment Map of Wenchuan Earthquake Disaster Area Type

Evaluation Results of Wenchuan Earthquake Disaster Chain Table of Earthquake Disaster Estimated Losses in Chuan/Gan/Shaan(10million) Estimated unit Sichuan Gansu Shaanxi Total Losses Wenchuan Earthquake Disaster Loss Statistics Report 8287 458 199 8943 Academy of Disaster Reduction and Emergency Governance,Ministry of Civil Affair&Ministry of Education ,Beijing Normal University > 6 on Richter Scale 8824 356 605 9785 > 7 on Richter Scale 7542 215 269 8026 Insititute of Industrial Economics of Cass, China Academy of Social Sciences 6399 593 244 7236 The last results 7717.70 505.35 228.30 8451.36

2 Integrated Risks Governance Mode of Large Scale Disasters in China and World

Disaster risk sharing mechanism according to disaster intensity The large-scale Disaster Insurance Mode

Chinese Risk Transfer Mode of Large-scale Disasters The China Agriculture Policy Insurance Experimentation Program (CAPIEP) Governments initiate Market operation Voluntary insurance Joint effort

Issues to be Considered Governments Public Insurance Companies Society : general populace private/public companies community

Chinese Risk Transfer Mode of Large Scale Disasters The principle of the risk transfer mode of LSDs should be “ supported by governments from different levels, operated by insurance companies, and shared by all of the stakeholders”

Small disaster risk relies on community government Medium-scale disaster risk relies on local government governance Larger disaster risk must be shared by central government, local governments, policyholders, insurers and reinsurers. LSDR needs the cooperation of the central government, policyholders, insurers, reinsurers, and international financial institutes ( Peijun SHI , et al , 2009 ). we should build such a pattern

The financial products of “LSD risk” available in concerned countries all over the world include mainly:
California Earthquake Insurance of USA( CEA )
Taiwan Residential Earthquake Insurance Pool ( TREIP )
Japanese Residential Earthquake Insurance ( JREI )
New Zealand Earthquake Insurance: Earthquake Committee ( EQC )
The Caribbean Catastrophe Risk Insurance Facility ( CCRIF )
Mexican Natural Disaster Relief Fund ( Forden )
The Turkish Earthquake Insurance Fund ( TEIF )
Globe Catastrophe Securities set up by Swiss RE ( GCS )
World Risk Transfer Mode of Large Scale Disasters

Based on the experience of risk governance in China, we propose to establish global risk transfer mode for LSDs
First, attach high attention to the instability of global climate change.
Second, formulate international standards for LSDs ( Shi, Peijun etc., 2009 ).
Third, give full play to the dual role of market and government.
Finally , attach great importance to the diversification of financial management tools for LSDs risk .

The principle of global risk transfer mode should be
"uniform standards, government support, market operation, public participation, disaster mitigation, and risk sharing".

3 Discussion

Discussion Integration of both top-down and bottom-up governance in transition-in and transition-out of LSD risk China How do we transform from resilient country and vulnerable community to resilient country and community of LSD risk in China?

Comparison Disaster Governance System Between China and US After Katrina, A New Shared Vision of National Preparedness System The National Preparedness System graphic additionally highlights the constituent elements of operational capabilities: deliberate planning, resources, logistics, training, and education. The National Preparedness System must be dynamic, flexible, and responsive to new developments.

Thank you ！

Integrated Risks Transfer Mode of Large Scale Disasters in China and World

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