Flood loss footprint characterization via hazard simulation

Established in 1984, the Wharton Risk Management and Decision Processes Center develops and promotes effective corporate and public policies for low-probability events with potentially catastrophic consequences through the integration of risk assessment, and risk perception with risk management strategies. Natural disasters, technological hazards, and national and international security issues (e.g., terrorism risk insurance markets, protection of critical infrastructure, global security) are among the extreme events that are the focus of the Center's research. The Risk Center's neutrality allows it to undertake large-scale projects in conjunction with other researchers and organizations in the public and private sectors. Building on the disciplines of economics, decision sciences, finance, insurance, marketing and psychology, the Center supports and undertakes field and experimental studies of risk and uncertainty to better understand how individuals and organizations make choices under conditions of risk and uncertainty. Risk Center research also investigates the effectiveness of strategies such as risk communication, information sharing, incentive systems, insurance, regulation and public-private collaborations at a national and international scale. From these findings, the Wharton Risk Center's research team – over 50 faculty, fellows and doctoral students – is able to design new approaches to enable individuals and organizations to make better decisions regarding risk under various regulatory and market conditions. The Center is also concerned with training leading decision makers. It actively engages multiple viewpoints, including top-level representatives from industry, government, international organizations, interest groups and academics through its research and policy publications, and through sponsored seminars, roundtables and forums. ABSTRACT Among all natural disasters, floods have historically been the primary cause of human and economic losses around the world. Improving flood risk management requires a multi-scale characterization of the hazard and associated losses-the flood loss footprint. But this is typically not available in a precise and timely manner, yet. We propose a novel and multidisciplinary approach to do just that, which relies on a computationally efficient hydrological model that simulates streamflow for scales ranging from small creeks to large rivers. We adopt a normalized index, the flood peak ratio (FPR), to characterize flood magnitude across multiple spatial scales. The simulated FPR is then shown to be a key statistical predictor for associated flood losses, based on insurance claims. Importantly, because it is based on a simulation procedure that utilizes generally readily available physically-based data, our flood simulation approach may be broadly utilized, even for ungauged and poorly gauged basins, thus providing the necessary …