IDEAS home Printed from https://ideas.repec.org/a/ora/journl/v1y2013i1p987-996.html
   My bibliography  Save this article

Catastrophic Events Modeling

Author

Listed:
  • Ciumas Cristina

    (Babeș-Bolyai University, Cluj - Napoca, Department of Finance, Faculty of Economics and Business Administration)

  • Coca Ramona Alexandrina

    (Babeș-Bolyai University, Cluj - Napoca, Department of Finance, Faculty of Economics and Business Administration)

Abstract

This paper presents the emergence and evolution of catastrophe models (cat models). Starting with the present context of extreme weather events and features of catastrophic risk (cat risk) we'll make a chronological illustration from a theoretical point of view of the main steps taken for building such models. In this way the importance of interdisciplinary can be observed. The first cat model considered contains three modules. For each of these indentified modules: hazard, vulnerability and financial losses a detailed overview and also an exemplification of a potential case of an earthquake that measures more than 7 on Richter scale occurring nowadays in Bucharest will be provided. The key areas exposed to earthquake in Romania will be identified. Then, based on past catastrophe data and taking into account present conditions of housing stock, insurance coverage and the population of Bucharest the impact will be quantified by determining potential losses. In order to accomplish this work we consider a scenario with data representing average values for: dwelling's surface, location, finishing works. On each step we'll make a reference to the earthquake on March 4 1977 to see what would happen today if a similar event occurred. The value of Bucharest housing stock will be determined taking firstly the market value, then the replacement value and ultimately the real value to quantify potential damages. Through this approach we can find the insurance coverage of potential losses and also the uncovered gap. A solution that may be taken into account by public authorities, for example by Bucharest City Hall will be offered: in case such an event occurs the impossibility of paying compensations to insured people, rebuilding infrastructure and public buildings and helping the suffering persons should be avoided. An actively public-private partnership should be created between government authorities, the Natural Disaster Insurance Pool, private insurance companies, reinsurers, stock exchanges, institutions specialized in cat events modeling in order to develop and use alongside compulsory and facultative insurance of buildings new alternative risk transfer solutions as catastrophe bonds(also known as cat bonds).

Suggested Citation

  • Ciumas Cristina & Coca Ramona Alexandrina, 2013. "Catastrophic Events Modeling," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 987-996, July.
  • Handle: RePEc:ora:journl:v:1:y:2013:i:1:p:987-996
    as

    Download full text from publisher

    File URL: http://anale.steconomiceuoradea.ro/volume/2013/n1/104.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Iuliana Armaş, 2006. "Earthquake Risk Perception in Bucharest, Romania," Risk Analysis, John Wiley & Sons, vol. 26(5), pages 1223-1234, October.
    2. Patricia Born & William Martin, 2006. "Catastrophe Modeling in the Classroom," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 9(2), pages 219-229, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Manqing Wu & Guochun Wu, 2020. "An Analysis of Rural Households’ Earthquake-Resistant Construction Behavior: Evidence from Pingliang and Yuxi, China," IJERPH, MDPI, vol. 17(23), pages 1-14, December.
    2. Dingde Xu & Chen Qing & Xin Deng & Zhuolin Yong & Wenfeng Zhou & Zhixing Ma, 2020. "Disaster Risk Perception, Sense of Pace, Evacuation Willingness, and Relocation Willingness of Rural Households in Earthquake-Stricken Areas: Evidence from Sichuan Province, China," IJERPH, MDPI, vol. 17(2), pages 1-19, January.
    3. Andrea Cerase & Lorenzo Cugliari, 2023. "Something Still Remains: Factors Affecting Tsunami Risk Perception on the Coasts Hit by the Reggio Calabria-Messina 1908 Event (Italy)," Sustainability, MDPI, vol. 15(3), pages 1-26, February.
    4. Jing-Shia Tang & Jui-Ying Feng, 2018. "Residents’ Disaster Preparedness after the Meinong Taiwan Earthquake: A Test of Protection Motivation Theory," IJERPH, MDPI, vol. 15(7), pages 1-12, July.
    5. Domingues, Rita & Costas, Susana & Neves Jesus, Saul & Ferreira, Óscar, 2019. "Assessing stakeholders’ risk perceptions in a vulnerable coastal tourism destination (Faro beach, Southern Portugal)," Journal of Tourism, Sustainability and Well-being, Cinturs - Research Centre for Tourism, Sustainability and Well-being, University of Algarve, vol. 7(1), pages 22-38.
    6. Catherine E. Lambert & Jason R. Holley & Katherine A. McComas & Natalie P. Snider & Grace K. Tucker, 2021. "Eroding Land and Erasing Place: A Qualitative Study of Place Attachment, Risk Perception, and Coastal Land Loss in Southern Louisiana," Sustainability, MDPI, vol. 13(11), pages 1-16, June.
    7. Daniela Ionescu & Claudia Iuliana Iacob & Eugen Avram & Iuliana Armaș, 2021. "Emotional distress related to hazards and earthquake risk perception," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 109(3), pages 2077-2094, December.
    8. Fabrizio Terenzio Gizzi & Donatella Porrini & Francesco De Masi, 2021. "Building a Natural Hazard Insurance System (NHIS): The Long-lasting Italian Case," Sustainability, MDPI, vol. 13(21), pages 1-22, November.
    9. Daniela Knuth & Doris Kehl & Lynn Hulse & Silke Schmidt, 2014. "Risk Perception, Experience, and Objective Risk: A Cross‐National Study with European Emergency Survivors," Risk Analysis, John Wiley & Sons, vol. 34(7), pages 1286-1298, July.
    10. Kaijing Xue & Shili Guo & Yi Liu & Shaoquan Liu & Dingde Xu, 2021. "Social Networks, Trust, and Disaster-Risk Perceptions of Rural Residents in a Multi-Disaster Environment: Evidence from Sichuan, China," IJERPH, MDPI, vol. 18(4), pages 1-25, February.
    11. Maria Grazia Filomena & Bruno Pace & Massimo De Acetis & Antonio Aquino & Massimo Crescimbene & Marina Pace & Francesca Romana Alparone, 2023. "Play to Learn: A Game to Improve Seismic-Risk Perception," Sustainability, MDPI, vol. 15(5), pages 1-11, March.
    12. Julia S. Becker & Douglas Paton & David M. Johnston & Kevin R. Ronan, 2013. "Salient Beliefs About Earthquake Hazards and Household Preparedness," Risk Analysis, John Wiley & Sons, vol. 33(9), pages 1710-1727, September.
    13. Ante Ivčević & Isabel Estrela Rego & Rui Gaspar & Vania Statzu, 2021. "Telluric and Climate-Related Risk Awareness, and Risk Mitigation Strategies in the Azores Archipelago: First Steps for Building Societal Resilience," Sustainability, MDPI, vol. 13(15), pages 1-11, August.
    14. Chen Qing & Shili Guo & Xin Deng & Wei Wang & Jiahao Song & Dingde Xu, 2022. "Stay in Risk Area: Place Attachment, Efficacy Beliefs and Risk Coping," IJERPH, MDPI, vol. 19(4), pages 1-19, February.
    15. Marco Modica & Roberto Zoboli & Fabrizio Meroni & Vera Pessina & Thea Squarcina & Mario Locati, 2021. "‘Near miss’ housing market response to the 2012 northern Italy earthquake: The role of housing quality and risk perception," Urban Studies, Urban Studies Journal Limited, vol. 58(11), pages 2293-2309, August.
    16. Dingde Xu & Zhuolin Yong & Xin Deng & Yi Liu & Kai Huang & Wenfeng Zhou & Zhixing Ma, 2019. "Financial Preparation, Disaster Experience, and Disaster Risk Perception of Rural Households in Earthquake-Stricken Areas: Evidence From the Wenchuan and Lushan Earthquakes in China’s Sichuan Province," IJERPH, MDPI, vol. 16(18), pages 1-17, September.
    17. Apostolos Kiohos & Maria Paspati, 2021. "Alternative to Insurance Risk Transfer: Creating a catastrophe bond for Romanian earthquakes," Bulletin of Applied Economics, Risk Market Journals, vol. 8(1), pages 1-17.
    18. Sefa Mızrak & Ahmet Özdemir & Ramazan Aslan, 2021. "Adaptation of hurricane risk perception scale to earthquake risk perception and determining the factors affecting women's earthquake risk perception," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 109(3), pages 2241-2259, December.
    19. E. Michel‐Kerjan & S. Hochrainer‐Stigler & H. Kunreuther & J. Linnerooth‐Bayer & R. Mechler & R. Muir‐Wood & N. Ranger & P. Vaziri & M. Young, 2013. "Catastrophe Risk Models for Evaluating Disaster Risk Reduction Investments in Developing Countries," Risk Analysis, John Wiley & Sons, vol. 33(6), pages 984-999, June.
    20. P. Bubeck & W. J. W. Botzen & J. C. J. H. Aerts, 2012. "A Review of Risk Perceptions and Other Factors that Influence Flood Mitigation Behavior," Risk Analysis, John Wiley & Sons, vol. 32(9), pages 1481-1495, September.

    More about this item

    Keywords

    cat risk; cat model; earthquake; financial losses;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ora:journl:v:1:y:2013:i:1:p:987-996. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catalin ZMOLE (email available below). General contact details of provider: https://edirc.repec.org/data/feoraro.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.