Troubled Waters: Report Calls for New Risk Analysis Services when Estimating Flood Insurance

As our weather patterns change and become more severe, it can’t be denied–climate change is upon us, and with it are some serious changes to life as we know it.  Take, for example, a recent report  commissioned by FEMA and  written by the National Research Council which outlines the true risks and costs of flooding in the Missouri and Mississippi river flood plains, and attempts to accurately price out flood insurance in a way that recovers actual costs.

The report highlighted the fact that flooding is bound to increase in severity–and thus, it's crucial to have a modern, statistically sound approach using risk analysis when analyzing and managing flood risk in areas protected by levees. Palisade’s @RISK software is used around the world for these type of analyses, and has in fact been used to analyze the risks and rewards of flood mitigation in the UK .  The National Research Council stated a need for state-of-the art estimates on how well levees will perform, in order to paint an accurate picture of the likely risks communities might face during flood conditions. Scenario analysis is key–multiple variables must be analyzed, such as how high a river might rise, and how many times will it crest it’s specified flood level.

According to Gerald Galloway, an engineering professor at the University of Maryland  who chaired the panel that produced this report, flood losses are continuing to rise. In fact, the National Weather Service predicts roughly $8 billion per year in flood losses–a number that is bound to grow as climate change continues.

The report states that, as an administrator of the Nation's  flood insurance program, FEMA must adopt a more up-to-date approach to analyzing as well as managing the risks of flooding behind levees. “Property owners would be more favorably inclined to buy flood insurance if individual risk is well-known, understood, and insurance rates are priced to match the probability of flooding and financial impact of flooding events,” the report says. 

If FEMA chooses to tackle the problem using @RISK, they'll be sure to have accurate answers to these complex questions.

 

See also: Using Risk Analysis to measure the impact of climate change

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