Comparison of different risk measures for portfolio-level earthquake risk assessment
Open access
Date
2021Type
- Other Conference Item
ETH Bibliography
yes
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Abstract
A risk measure quantifies the risk associated with a single asset (e.g., an individual building) or a group of assets (e.g., a building portfolio of a region) exposed to one or more sources of hazard during a given time horizon. These risk measures serve as objective functionals that define subsets of “acceptable” and “unacceptable” risks. In performance-based seismic design, a new building should fulfill a set of performance objectives not only to protect human life in rare earthquakes but also to limit direct (e.g., repair cost) and indirect (e.g., downtime, business interruption) financial losses in more frequent seismic events. These performance objectives are commonly formulated as limits on risk measures for individual buildings.
The potentially large spatial footprint of earthquakes and the increased concentration of population and values in dense urban areas call for an explicit consideration of seismic risk at a regional level, in particular when formulating performance objectives for new individual building structures. Subadditivity is a desired mathematical property of risk measures in this setting, because the sum of subadditive risk measures evaluated separately for each individual building is an upper bound on the joint risk measured for a portfolio of buildings.
The present study reviews different risk measures commonly employed in earthquake engineering and in the financial industry and discusses their mathematical properties with special emphasis on subadditivity. To illustrate the importance of subadditivity for earthquake engineering, a seismic loss analysis is performed for a given portfolio of buildings situated in a virtual hazard environment. Financial losses due to earthquake-induced building property damage are quantified for the individual buildings and for the portfolio of buildings using a set of risk measures. Given the defined hazard, vulnerability and exposure, the results show that quantile-based measures, such as the loss with a certain mean annual frequency of exceedance, are subadditive only for losses with a recurrence interval longer than 200 years. As a consequence, using quantile-based measures could lead to underestimation of portfolio-level financial losses for more frequent events. Show more
Permanent link
https://doi.org/10.3929/ethz-b-000464975Publication status
publishedPages / Article No.
Event
Subject
Performance based design; Regional earthquake risk analysis; Building codes; Financial risk measuresOrganisational unit
03930 - Stojadinovic, Bozidar / Stojadinovic, Bozidar
Notes
Conference postponed due to Corona virus (COVID-19). Rescheduled from September 13–18, 2020 to September 27 – October 2, 2021.
Poster presentation held on September 29, 2021.More
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ETH Bibliography
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