Measuring the Financial Impact of Typhoon Due to Climate Change

Abstract

The recent increase in abnormal weather and natural disasters has become one of the hottest issues around the world. The 5th Assessment Report of the Intergovernmental Panel on Climate Change (IPCC, 2014) warns of an increase in global average temperature, warming and acidification, an increase in average sea level, and extreme rainfall. Already, Korea is not free from extreme weather events, and the damage caused by natural disasters is increasing every year due to changes in rainfall patterns such as typhoons and heavy rainfall. Therefore, the purpose of this study is to quantify the financial impact of natural disasters caused by global warming. The intensity and frequency of typhoons are analyzed every decade to analyze changes in natural disasters due to climate change, and the amount of financial loss is quantified using the typhoon vulnerability function used in South Korea to prevent distortions from population and wealth. The assessment of increased typhoon risks from climate change and the estimation of damages are very important to government policy-making and insurers’ business strategies. Therefore, through this study, it was found that the risk management strategy of various angles could be established by performing the damage prediction of the typhoon caused by climate change based on the rational scenario.