Historical Background of the term ‘Risk’

 1970s- During Cold War confrontations between major

powers, notably the USA and the USSR. It became
widespread in insurance circles when major oil tanker
disasters forced a more comprehensive foresight. Example-
Insurance Risk

 1980s-The scientific approach to risk entered finance in the

1980s when financial derivatives proliferated. Example-
financial risk.

 1990s- It reached general professions in the 1990s when the

power of personal computing allowed for widespread data
collection and numbers crunching. Example- Professional
Risk.

 Governments are apparently only now learning to use

sophisticated risk methods, most obviously to set standards
for environmental regulations, e.g. “pathway analysis" as
practiced by the United States Environmental Protection
Agency.
 RISK
Risk is a concept that denotes a potential negative impact to
an asset or some characteristic of value that may arise from
some present process or future event. In everyday usage,
risk is often used synonymously with the probability of a
known loss.

Risk is the possibility of an event occurring that will have an

impact on the achievement of objectives. Risk is measured in
terms of impact and likelihood.

Risk depends on specific applications and situational

contexts. It can be assessed qualitatively or quantitatively-

Qualitatively, risk is considered proportional to the expected

losses which can be caused by an event and to the
probability of this event. The harsher the loss and the more
likely the event, the greater the overall risk.
In engineering, the quantitative engineering definition of risk is:
Probability of an accident*losses per accident

In other words, Risk is defined as a function of three variables:

1. the probability that there is a threat
2. the probability that there are any vulnerabilities

3. the potential impact.

 Main Risk Factors

 External Threats Hazards

- Inherent Weaknesses Vulnerabilit
y
Disaster Risks:
The probability that negative consequences may arise
when hazards interact with vulnerable areas, people,
property and environment.

Risk = Hazard X Vulnerability

 RISKS
REHABILITATON
RISK
ASSESSMENT

TREATMENT

After Before
Disaster Disaster

RISK
MITIGATION
DAMAGE
ASSESSMENT
During
Disaster RISKS
RISKS

RESPONSE EMERGENCY
PROCEEDURES PREPAREDNESS

Relationship between Disaster Management & Risk Management

RELEVANCE OF DISASTER RISK

Bringing disaster risk reduction and development

concerns closer together requires three steps:

 The collection of basic data on disaster risk and the

development of planning tools to track the
relationship between development policy and disaster
risk.
 The collection and dissemination of best practice in
development planning and policy that reduce disaster
risk.
 The galvanizing of political will to reorient both
the development and disaster management sectors.
 Governing Disaster Risk

Governance for disaster risk reduction has economic, political and

administrative elements:

 Economic governance includes the decision-making process that

affects a country’s economic activities and its relationships with
other economies.

 Political governance is the process of decision-making to formulate

policies including national disaster reduction policy and planning.

 Administrative governance is the system of policy implementation

and requires the existence of well functioning organisations at the
central and local levels. In the case of disaster risk reduction, it
requires functioning enforcement of building codes, land-use
planning, environmental risk and human vulnerability monitoring
and safety standards.
 In short- Disaster Risk
 A considerable incentive for rethinking
disaster risk as
 an integral part of the development process
comes
 from the aim of achieving the goals laid out
in the
 Millennium Declaration. The Declaration
sets forth a
 road map for human development
supported by 191
 nations.
Risk Assessment
 Risk can be measured by impacts x probability.

 Risk assessment is considered as the initial and periodical step

in a risk management process. Risk assessment is the
determination of quantitative or qualitative value of risk related to
a concrete situation and a recognised threat.

 Once risks have been identified, they must then be assessed as

to their potential severity of loss and to the probability of
occurrence.

 The fundamental difficulty in risk assessment is determining the

rate of occurrence since statistical information is not available on
all kinds of past incidents. Furthermore, evaluating the severity of
the consequences (impact) is often quite difficult for immaterial
assets.
Risk Assessment
Asset valuation is another question that needs to be addressed.
Thus, best educated opinions and available statistics are the
primary sources of information.

 Nevertheless, risk assessment should produce such information

for the management of the organization that the primary risks are
easy to understand and that the risk management decisions may
be prioritized. Thus, there have been several theories and
attempts to quantify risks. Numerous different risk formulae exist,
but perhaps the most widely accepted formula for risk
quantification is:
Rate of occurrence * the impact of the event = Risk
Vulnerability

 Vulnerability is the susceptibility of human settlements to the harmful

impacts of natural hazards. Impacts of concern include injuries and
deaths to human populations; damage to personal property,
housing, public facilities, equipment, and infrastructure; lost jobs,
business earnings, and tax revenues, as well as indirect losses
caused by interruption of business and production; and the public
costs of planning, preparedness, mitigation, response, and recovery.
(Deyle et al. 1998)

 "The susceptibility to injury or damage from hazards." (Godschalk,

1991)
 Vulnerability varies by location (or space) and over time - it has both
temporal and spatial dimensions…...There are many types of
vulnerability of interest to the hazards community, but three are the
most important-

1. Individual- Individual vulnerability is the susceptibility of a person or

structure to potential harm from hazards

2. Social- describes the demographic characteristics of social groups

that make them more or less susceptible to the adverse impacts of
hazards. Social vulnerability suggests that people have created their
own vulnerability, largely through their own decisions and actions. .

3. Biophysical- examines the distribution of hazardous conditions

arising from a variety of initiating events such as natural hazards,
chemical contaminants, or industrial accidents."
(Hill and Cutter 2001, 14-15)
Capacity
Capacities could be defined as the community to
intervene and manage a hazard in order to
reduce potential impact.

Capacities can also be considered as scaled

factors that lead to greater danger (vulnerability)
when they are low, and reduced danger when
they are high.

More the vulnerability, less the capacities, and

vice-versa.
 Assessment

Assessment is the process of determining the impact of a disaster

on a specific society….. Assessments must be carefully
planned and managed. The assessment process includes-

 Identification of information needs and sources of reliable data.

 Collection of data.
 Analysis and interpretation of data.
 Report Writing
 Drawing conclusions and forecasting
 Preparing attentions for planners and decision makers