An introduction to flood modeling for catastrophe risk management

The second half of last century has witnessed the emergency and development of catastrophe risk models. These tools are now well-established in risk management practices for most natural perils. The number of applications has also grown in time and while at the beginning catastrophe models were solely used by insurance companies to assess the insurability of a certain peril, they are now applied to address many different risk management problems, not limited to the insurance industry. Flood risk in particular saw an increased interest from stakeholders in recent years, mainly driven by a sharp increase in global flood losses as well as projections on how these will be impacted by climate change. This contribution aims to provide a broad introduction to catastrophe risk models with focus on flood risk. In particular, after providing a description of catastrophe risk models, we discuss current methods to model flood hazard for such models. Subsequently, we identify four unique challenges in the development of flood risk models and how these differ from other natural perils. This article is categorized under: Engineering Water > Engineering Water