ON FLOOD RISK MANAGEMENT ACROSS SOCIO-ECONOMIC ENVIRONMENTS

Ni, Weihong, Henshaw, Kira ORCID: 0000-0002-9018-7993, Zhu, Wei, Wang, Jing, Hu, Maoqi and Constantinescu, Corina ORCID: 0000-0002-5219-3022 (2020) ON FLOOD RISK MANAGEMENT ACROSS SOCIO-ECONOMIC ENVIRONMENTS. ANALES DEL INSTITUTO DE ACTUARIOS ESPANOLES (26). pp. 71-102.

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Official URL: http://dx.doi.org/10.26360/2020_4

Abstract

<jats:p>In this paper, we discuss the insuring of flood losses across socio-economic environments, by pooling their risk exposures at continental and global levels. Grouping regions by their flood count over the last century, we cluster countries based on estimations of their value-at-risk, minimising the total value-at-risk from all clusters, as in Prettenthaler, Albrecher, Asadi, and Köberl (2017). Using heavy-tailed distributions to model the losses (presented as percentages of GDPs and adjusted to inflation), we seek an optimal risk pooling strategy across countries, irrespective of their socio-economic status. The financial benefits for such risk sharing, both at the continental and global levels, are quantified by the overall corresponding values-at-risk with or without pooling. We advocate this risk partner- ship across socio-economic environments, as a mechanism for reducing risk premiums and increasing efficiency in disaster response.</jats:p>

Item Type:	Article
Uncontrolled Keywords:	flood risk, risk pooling, value-at-risk, heavy-tailed distributions
Depositing User:	Symplectic Admin
Date Deposited:	07 Jan 2021 16:22
Last Modified:	11 Mar 2023 21:30
DOI:	10.26360/2020_4
Open Access URL:	https://www.actuarios.org/wp-content/uploads/2020/...
Related URLs:	Author Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3112833