National Geographic : 1998 Jul
Living in the shadow of risk PROJECTING RISK is an uncertain science. Yet it's one pursued with increasing vigor by U.S. insurers, who have taken unprecedented losses in the 1990s from natural disasters such as Hurricane Andrew in Florida and the Northridge earthquake in Califor nia, which together totaled 28 billion dollars in claims. Risk Management Solutions, Inc., of Menlo Park, Califor nia, is one of many firms that use computer modeling to help insurers assess risk. Based on historic records, RMS first simulates a set of hazardous events such as hurricanes, factoring in variables like wind speed, storm track, and probability of occurrence. Then it assesses the percentage of damage a given event would cause to all types of buildings in harm's way. RMS can then estimate an insurer's aver age annual loss from these natural calamities. Shown here for the first time are RMS's combined data for hurricanes, earthquakes, tornadoes, and hail four of the most costly hazards to insurers. (Flooding, largely covered by the federal govern ment, is not included.) Losses in the most hazardous areas, shown as dark red patches, would be at least 45 times greater than those in the lowest risk zones, shown as dark green. Such knowledge may move insurers to alter their rates, but it hardly deters people from moving to risky coasts, as the adjoining population-density map shows. * Cities such as Port land and Seattle are at risk from quakes along local faults and the Cascadia subduction zone. * Although Califor nia's major faults are well mapped, the Northridge quake occurred along a hidden fault. onolulu * Hurricane Iniki, Hawaii's costli est, caused 1.6 billion dollars of insured losses in 1992. SCALESVARYINTHESEPERSPECTIVES. 3-DRENDERINGSBY BRIANSTRAUSS,NGS * Southern Alaska and the Aleutians are the most seismically active regions in the United States.