To initiate and coordinate the interaction of NERC researchers and research with the UK financial services sector

To initiate and coordinate the interaction of NERC researchers and research with the UK financial services sector. In the first instance this will predominantly be related to work on risk and uncertainty within the NERC Natural Hazards theme. The position will allow for an active researcher to promote knowledge exchange with the financial services sector, whilst remaining based in her research group. The position is to be embedded in the NERC Knowledge Exchange Strategy and the fellow will work closely with Professor John Rees (Theme Leader for Natural Hazards) and the NERC Knowledge Exchange Team.

In section 7 we have discussed the problems caused by a lack of suitable tools and approaches to the handling of uncertainty and risk which have had a large impact in natural hazard risk assessments. This has arisen because of cultural divides within the natural hazard community between providers and users of uncertainty and risk research. The lack of cross-sectional communication has resulted in each science area and sector developing its own concepts and methodologies in isolation. Furthermore, the lack of interdisciplinary research has meant that new techniques and tools from statistics and related fields have not been systematically incorporated into risk assessment models.
As natural hazards can be extremely damaging, and every country can be affected, even small advances in risk management have a huge potential to bring substantial and highly visible benefits. This ultimately translates into a reduction in lives lost and financial losses incurred by individuals, states and insurance companies. For example, in 2009 there were 860 loss events due to natural hazards recorded world wide with a total economic loss of US$59 billion and 11,000 fatalities (Munich Re 2010). The most expensive losses in Europe in 2009 were Winter Storm Klaus which cost the insurance industry US$3 billion. 2010 is set to be one of the costliest years on record with the Haiti earthquake alone totalling between US$8-14bn in economic losses and 220,000 fatalities.
In the UK, the biggest threat comes from river flooding and flash floods with windstorms a close second. The financial effects of flooding can be significant; for example, the Association of British Insurers has put the average cost of flood damage to homes at between £20,000 and £40,000 (November 2009). The 2007 floods across Yorkshire, the Midlands and the West of England cost insurers over £3 billion. The 2009 floods in Cumbria, West Wales, and Dumfries and Galloway, although on a smaller scale still cost insurers over £1.5m. The Association of British Insurers predict that with a 4oC rise in global temperatures, the average insured losses in the UK from river flooding and flash floods could rise by 14% to £633 million by 2060 and windstorm damage by 25% to £827 million each year.
Between 1960 and 2000, disasters caused by natural hazards worldwide more than tripled and economic losses increased more than eight fold yet the death toll was cut in half (Munich Re 2000). The rise in economic loss over this period is due to rapid and poorly controlled urbanisation, ineffective public policy and increasing construction in hazard prone areas as well as variations in climate (World Disasters Report 2004). On average, the economic loss in developed countries is around US$318 million per event. This is more than 11 times higher than comparable events in third world countries. However, this does not reflect the impact that these events have on the gross domestic product of poorer countries; for example, 300 people die per disaster in poor countries as opposed to 44 people in the developed world.
In the 20th Century 275,000 people on average have died per year because of natural hazards. There was no significant increase in death rates due to natural hazards over this period. This suggests that decades of international technical assistance, which gave priority attention to disaster rescue and relief and also to improvements in weather forecasting balanced population increases. This provides clear evidence on how a scientifically integrated cross-disciplinary approach significantly reduced fatalities due to natural hazards. It is felt that if a similar approach were taken to reduce economic losses concentrating on improving communication between researchers from a variety of disciplines and risk managers, this would result in improvements in our ability to quantify uncertainty and risk, ultimately leading to better risk management and therefore a reduction in economic losses in the long term.

Timetable for measuring impact

Year 0-3 3 – 5 5- 10
IMPACT Integration of uncertainty and risk assessment practises across natural hazards collaborative development of generic models for uncertainty and risk assessment Consistent reduction in economic losses over the 5 to 10 year period