Disaster Risks: Evidence and Theory

Abstract

Risk can be defined as the product of three factors: (1) the hazard, which is the natural event, such as a storm or an earthquake; (2) the exposure, which is the population and assets potentially affected by hazards; and (3) the sensitivity, i.e. the human and economic losses if population and assets are affected by a hazard. The chapter proposes a brief overview of natural risks today and discusses current trends in disaster losses by introducing the notion of risk-taking (and the benefits from risk-taking). Taking into account the benefits of taking risks helps us to understand why many people and assets are located in at-risk areas, such as flood plains and coastal zones. It also helps introduce potential policy options to reduce risk. The chapter concludes that there is no reason natural disaster losses will stop increasing in the future unless specific risk-reducing actions are implemented. Development does not automatically reduce natural disaster risks, and natural hazards need to be taken into account in development plans.