Cambridge English Dictionary defines risk as the possibility of something bad happening or something bad that might happen.
Risk refers to expected or anticipated losses from the impact of a given hazard on a given element at risk over a specific period of time. It is important to note that risk is perceived differently by different people, and acceptable level of risk tend to vary with socio-economic development of the communities.
We all are fully conversant with risk, but it does not mean the same thing to everyone. Each one of us however has her own unique definition of risk which might be influenced by her background, experience, socio-economic status, job profile, training and the like. We at the same time take risk numerous times on daily basis; sometimes consciously but mostly subconsciously. It might be avoiding helmet or seat belt, and overspending or overtaking while driving, or simply crossing a busy road.
So what might seem highly risky to me might be a simple routine task for her because of her training, and previous experience. Drinking tap water could be risky for one coming from US but not for me or even you. Many a times our stupid decisions are related to taking calculated risk, and these might be investment decision in a ponzi scheme or resorting to something fraudulent.
The level of risk might vary depending on social status, work profile or behaviour. My lifestyle being sedentary I face high risk of cardiovascular ailments while being a doctor she faces high risk of being infected with Covid-19. Police, and Armed Forces personnel generally face high risk of getting injured, and amongst these the risk of ones serving in battle zone or disturbed area is even higher.
It needs to be understood that while risk can certainly be managed, it is not possible to eliminate risk all together. For example, by following traffic rules, and regular maintenance of our vehicle we can lower our risk of getting with an accident, but while on road we would always have to face the risk of being hit by other vehicle. So the total risk can be split into avoidable, and residual risk.
Disaster risk is actually the result of the complex interaction between development processes that generate conditions of exposure, vulnerability, and hazard. Disaster risk therefore results from a combination of the severity, and frequency of a hazard, number of people, and assets exposed to the hazard, and their vulnerability to damage. Disaster risk associated with low-probability, high-impact events such as earthquake is described as intensive risk, while extensive risk is associated with high-probability, low-impact events such as landslide.
The losses, and impacts caused by disasters usually have much to do with exposure, and vulnerability of people and places as also the severity of the hazard event. In order to understand disaster risk, it is essential to understand that it is:
- Forward looking: The likelihood of loss of life, destruction, and damage in a given period of time
- Dynamic: It can increase or decrease according to our ability to reduce vulnerability, and exposure
- Invisible: It comprises not only the threat of high-impact events, but also frequent, low-impact events that are often hidden.
- Unevenly distributed around the earth: Hazards affect different areas, but the pattern of disaster risk reflects the social construction of exposure, and vulnerability in different countries
- Emergent and complex: Many processes, including climate change, and globalized economic development are creating new, interconnected risks
It is important to note that the disasters threaten development, just as development creates disaster risk. For better understanding of disaster risk one has to therefore recognise that disasters are an indicator of development failures, meaning that disaster risk is a measure of the sustainability of development. This is evident from the very fact that hazard, vulnerability, and exposure are influenced by a number of risk drivers, including poverty and inequality, badly planned and managed urban and regional development, and climate change and environmental degradation.
Understanding disaster risk requires us to not only consider hazard, exposure, and vulnerability but also the capacity of the society to protect itself from disasters. The ability of communities, societies, and systems to resist, absorb, accommodate, and recover from disasters, whilst at the same time improve wellbeing, is known as resilience.
Disaster risk is expressed as the likelihood of loss of life, injury or destruction, and damage from a disaster in a given period of time. The definition of disaster risk reflects the concept of hazardous events, and disasters as the outcome of continuously present conditions of risk.
Disaster risk is widely recognized as the consequence of the interaction between a hazard, and the characteristics that make people, and places vulnerable, and exposed.
Why does disaster risk matter?
Growth of current global patterns of increasing exposure, high levels of inequality, rapid urban development, and environmental degradation are observed to result in increased disaster risk.
Between 1980 and 1999, 1.19 million people were killed due to disaster incidences. In the next two decades between 2000 and 2019 the number of deaths reached 1.23 million. Global average annual loss is estimated to increase to US$ 415 billion by 2030.
It is important to note that disasters particularly affect the poorest, and most marginalised people, while also exacerbating vulnerabilities and social inequalities, and hindering economic growth.
Disaster mortality risk is closely correlated with income level, and quality of risk governance. Although some countries have successfully reduced disaster-induced deaths from floods, and cyclones, evidence suggests that the numbers of deaths from extensive risks are increasing. Increase in extensive disaster loss, and damage is an evidence that disaster risk is an indicator of failed or skewed development, of unsustainable economic and social processes, and of ill-adapted societies.
In most economies 70-85% of overall investment is made by the private sector, which generally does not consider disaster risk in its portfolio of risks.
Across the globe, the concentration of high-value assets in hazard prone areas has grown.
The disaster losses, analysed relative to the income status of the country, clearly show that low and middle-income countries are suffering the greatest losses.
Disaster risk is therefore a problem for people, businesses, and governments alike.
Identifying, assessing and understanding disaster risk is critical to reducing it. We can estimate disaster risk by analysing trends, for instance, previous disaster losses. These trends could help us to gauge whether disaster risk reduction is having a positive impact. We can also estimate future losses by conducting a risk assessment.
A comprehensive risk assessment considers the full range of potential disaster events, and their underlying drivers together with uncertainties. It can start with the analysis of historical events as well as incorporating forward-looking perspectives, integrating the anticipated impacts of phenomena that are altering historical trends, such as climate change.
In addition, risk assessment could also consider rare events that lie outside projections of future hazards but that, based on scientific knowledge, could occur. Anticipating rare events however requires a range of information, and interdisciplinary findings, along with scenario building, and simulations, which could be supplemented by expertise from a wide range of disciplines.
Data on hazards, exposures, vulnerabilities, and losses enhance the accuracy of risk assessment, contributing to more effective measures to prevent, prepare for, and financially manage disaster risk.
Modern approaches to risk assessment include risk modelling, which allow us to simulate the outcomes, and likelihood of different events.
Risk assessments help in estimating possible economic, infrastructure, and social impacts arising from a particular hazard or multiple hazards. The components of assessing risk (and the associated losses) include:
- Hazard that is defined as the probability of experiencing certain intensity of hazard such as earthquake or cyclone at a specific location, and is usually determined by a historical or user-defined scenario, probabilistic hazard assessment, or other methods. Some hazard modules could also include secondary hazards such as soil liquefaction or fires caused by earthquake, or storm surge associated with a cyclone.
- Exposure the represents the population, property, and infrastructure exposed to a hazard, and it could also include socioeconomic factors.
- Vulnerability that accounts for the damage susceptibility of the assets exposed to the forces generated by the hazard. Fragility, and vulnerability functions estimate the damage ratio, and consequent loss respectively, as also the social cost, such as number of injured, homeless, and killed, generated by a hazard, according to a specified exposure.
But, even within the simple framework of risk that is a function of hazard, exposure, and vulnerability, there exist a multitude of possible approaches to risk assessment and risk modelling. When performed at the national level, risk assessments range from qualitative national risk profiles for advocacy purposes to the quantitative assessment of risk to inform country’s financial strategies for addressing the accumulating risks. Different types of risk assessments are thus applied at different scales.
Risk can be assessed both deterministically (single or few scenarios), and probabilistically (the likelihood of all possible events). Probabilistic models “complete” historical records by reproducing the physics of the phenomena, and recreating the intensity of a large number of synthetic (computer-generated) events. As such, these provide a more comprehensive picture of the full spectrum of future risks than is possible with historical data.
The convergence of public, and private sector risk modelling efforts promise to increase the availability of open access, open source risk information that could be used by business, government, insurance, and citizens alike. However, while the experts clearly understand limitations of these models, DRR practitioners using the information produced by these models do not always understand these limitations.
Though important challenges remain in assessing risk, there exists an improved understanding—on the part of governments as well as development institutions—that risk must be managed on an ongoing basis, and that disaster risk management requires many partners working cooperatively, and sharing information.
Risk information provides a critical foundation for managing disaster risk across a wide range of sectors:
- In the insurance sector the quantification of disaster risk is essential, given that the solvency capital of most non-life insurance companies is strongly influenced by their exposure to natural catastrophe risk.
- In the construction sector, quantifying the potential risk expected in the lifetime of a building, bridge, or critical facility drives the development, and modification of building codes.
- In the land-use, and urban planning sectors, robust analysis of flood risk likewise drives investment in flood protection, and possibly effects changes in insurance as well.
- At the community level, an understanding of hazard events—whether from living memory or oral and written histories—can inform, and influence decisions on preparedness, including life-saving evacuation procedures, and the location of important facilities.
It is well recognised that risk is not static, and that it can change very rapidly as a result of evolving hazard, exposure, and vulnerability. Decision makers therefore need to engage today on the risk they face tomorrow. Fortunately, significant new methodologies and data sets are being developed that would increasingly make modelling future risks possible.