1. Identifying the risk from the average expected
annualized losses at earthquake
Gabriela Atanasiu, Genoveva Perju
Technical University of Iasi, Romania
ICBE 2007

2. Magnitude Description of Effect
less than
Usually felt by only a few people near the epicenter.
3.4
Felt by people who are indoors and some outdoors; vibrations
3.5 - 4.2
similar to a passing truck.
Felt by many people; windows rattle, dishes disturbed, standing
4.3 - 4.8
cars rock.
Felt by everyone; dishes break and doors swing, unstable objects
4.9 - 5.4
overturn.
Some damage to buildings; plaster cracks, bricks fall, chimneys
5.5 - 6.1
damaged.
Much building damage; houses move on their foundations,
6.2 - 6.9
chimneys fall, furniture moves.
Serious damage to buildings; bridges twist, walls fracture, many
7.0 - 7.3
masonry buildings collapse.
7.4 - 7.9 Causes great damage; most buildings collapse.
greater Causes extensive damage; waves seen on the ground surface,
than 8.0 objects thrown into the air.
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3. ICBE 2007

4. Earthquakes - 1996
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5. Hawaii is the state at greatest
risk for a tsunami. They get
about one a year, with a
damaging tsunami happening
about every seven years. Alaska
is also at high risk. California,
Oregon and Washington
experience a damaging tsunami
about every 18 years.
Tsunami Damage, Indian Damage at the Mauna Kea Beach Resort: (a)
Ocean December 26, 2004 structural damage at an elevator shaft and (b)
ICBE 2007 severe cracking at expansion joint

6. Forecasting Theory
- Moving Average
Risk
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7. Identifying the risk from the average expected annualized losses at earthquake
• (Porter et.others , 2004 )
∞
EAL = V ∫ y ( s )v ( s )ds
s =0
• where:
• V denotes value exposed to loss (e.g., replacement cost
of the building);
• s refers to some seismic intensity measure;
• y(s) is the mean seismic vulnerability function, defined
here as the average level of loss as a fraction of V given
an occurrence of s;
• v(s) is the average annual frequency of experiencing
shaking intensity s.
ICBE 2007

8. Identifying the risk from the average expected annualized losses at earthquake
8
EAL = ∫
V y ( s )v ( s )ds
s=1
=7V * y (c ) * v( c)
• y (c ) and v (c ) are the mean values of the seismic
vulnerability function respectively of the annual
frequency of experiencing a shaking intensity s.
• We consider one medium probability of loss occurrence
at a medium value of the shaking magnitude.
y (c)= [1 0.75 0.5 0.33 0.25]
ICBE 2007

9. Identifying the risk from the average expected annualized losses at earthquake
Loss probability 100% 75% 50% 33% 25%
Frequency
1/1 (1.0) 7V 5.25 V 3.5 V 2.31V 1.75V
½ (0.5) 3.5 V 2.65 V 0.25 V 0.17 V 0.13 V
1/3 (0.33) 2.33 V 0.25 V 0.165 V 0.11 V 0.08 V
¼ (0.25) 1.75 V 0.19 V 0.125 V 0.08 V 0.06 V
1/5 (0.2) 1.4 V 0.15 V 0.1 V 0.07 V 0.05 V
1/6 (0.16) 1.12 V 0.12 V 0.08 V 0.05 V 0.04 V
1/7 (0.14) 0.98 V 0.11 V 0.07 V 0.05 V 0.04 V
1/8 (0.12) 0.84 V 0.09 V 0.06 V 0.04 V 0.03 V
1/9 (0.11) 0.77 V 0.08 V 0.055 V 0.04 V 0.03 V
1/10 (0.1) 0.7 V 0.08 V 0.05 V 0.03 V 0.03 V
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10. Identifying the risk from the average expected annualized losses at earthquake
Loss 100% 75% 50% 33% 25%
probabilit
y
Frequenc
y
1/1 (1.0) Unacceptab Unacceptab Unacceptab Unacceptab Unacceptab
le risk le risk le risk le risk le risk
½ (0.5) Unacceptab Unacceptab Medium Medium Medium
le risk le risk risk risk risk
1/3 (0.33) Unacceptab Medium Medium Medium Low risk
le risk risk risk risk
¼ (0.25) Unacceptab Medium Medium Low risk Low risk
le risk risk risk
1/5 (0.2) Unacceptab Medium Low risk Low risk Low risk
le risk risk
1/6 (0.16) Unacceptab Medium Low risk Low risk Low risk
le risk risk
1/7 (0.14) High risk Medium Low risk Low risk Low risk
risk
1/8 (0.12) High risk Low risk Low risk Low risk Low risk
1/9 (0.11) High risk Low risk Low risk Low risk Low risk
1/10 (0.1) High risk ICBE 2007
Low risk Low risk Low risk Low risk

11. Conclusions
• The seismic risk with low frequency of occurrence and
low proximity of loss should be ignored and therefore not
insured. We refer here to losses below 10% of the initial
value of the building that in any case are not covered by
insurance because of deductibles.
• In case of an earthquake occurrence of once in every
year the risk is unacceptable and disinvestment should
be considered as option.
• For frequencies of occurrence of once in one year and
once in two years the seismic risk cannot be mitigated
through diversification and therefore unacceptable for
insurer too.
• The only insurable risk is the medium towards high level
of seismic risk. If the expected losses exceed 80% of the
initial investment the decisions of risk mitigation should
involve disinvestment or governmental aid.
ICBE 2007