Hybrid loss exceedance curve (HLEC) for disaster risk assessment

Abstract

Taken into account that the natural hazard risk is a contingent liability and, therefore, a sovereign risk for national governments, it is important to assess properly the potential losses to design a suitable risk reduction, retention and transfer strategy. In this article, a disaster risk assessment methodology is proposed based on two approaches: on the one hand, the empiric estimation of losses, using information available from local disaster databases, allowing estimating losses due to small-scale events and, on the other hand, probabilistic evaluations to estimate losses for greater or even catastrophic events, for which information usually is not available due to the lack of historical data. A ‘‘hybrid’’ loss exceedance curve is thus determined, which combines the results of these two approaches and represents the disaster risk in a proper and complete way. This curve merges two components: the corresponding to small and moderate losses, calculated using an inductive and retrospective analysis, and the corresponding to extreme losses, calculated using a deductive and prospective analysis. Applications of this risk assessment technique are given in this article for eleven countries