Abstract
The results of earthquake risk assessments should be presented in ways that will help facilitate risk management decisions. So the measures of risk that are chosen need to be those that will assist decision-makers. Annualised Loss may not be the best basis on which risk management decisions can be made. The Conditional Expected Value of the loss, defined for a suitable set of probability ranges, is a promising measure of the risk because it is similar to a scenario loss and can be readily comprehended by decision-makers. Utility Theory provides a further measure by taking account of individuals’ perceptions of the severity of losses. It can be combined with the concept of Net Present Value to give an overall measure of the risk in terms of the value judgements of the individual decision-maker. The reduction in risk that would result from proposed mitigation works can be readily assessed, so that the decision-maker who is faced with the costs of mitigation is in a position to assess the benefits.
Highlights
Earthquake risk analysis combines all the detail of established procedures of earthquake hazard assessment with engineering assessments of the vulnerability of assets
It is a fairly routine procedure to set up source models for point, line and area seismic sources, and to combine these with attenuation models to produce assessments of hazard that are specific to given locations
Its use addresses the FEMA (2001) point that the annualised loss may not give a true picture of the severity of large events
Summary
Earthquake risk analysis combines all the detail of established procedures of earthquake hazard assessment with engineering assessments of the vulnerability of assets. While hazard assessment combines source and attenuation modelling, risk assessment goes one step further, to estimate likely losses to structures by modelling their vulnerability This results in probabilistic estimates of losses, for specific portfolios of assets. The purpose of the risk assessment is to produce data that will provide a quantitative basis, as far as is possible, on which that decision can rest It is incumbent on the risk analyst to be in dialogue with the decision-maker, in order to understand the decisions to be made and the constraints under which the decision-making process must operate, and to present the results of the analysis in the most useful way (National Research Council, 1996). No one measure is adequate for risk management purposes, but together they form a set of measures that can provide a quantitative basis for decision-making
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