RMSI, a global IT services company, announced that it has successfully carried out a pilot catastrophe risk assessment study for four Indian states, viz. Andhra Pradesh, Gujarat, Maharashtra, and Orissa, as part of World Bank’s ongoing regional initiatives for risk transfer in Asia.
The purpose of this World Bank initiative is firstly to assess the financial risks of natural hazards including the exposures, and vulnerabilities of countries in this region to catastrophic shocks; secondly, to evaluate the existing post-disaster funding mechanisms in the region, including catastrophe insurance and reinsurance arrangements; and thirdly, to explore methods of funding the direct costs of natural disasters outside the national budget.
The study was awarded to RMSI in February, with the challenge of delivering the findings within a span of three months. The initial findings were subsequently followed by a detailed report. “It was a much bigger challenge, in view of the limitations in India when compared with developed countries, ” says Adityam Krovvidi, Head of the Risk Management Group at RMSI. “Limited data and domestic research, accessibility and reliability of the data, and also a general lack of appreciation of the benefits of public and private sector collaboration in the country made the task an uphill one, ” he adds.
The project involved a comprehensive risk assessment study of the four Indian states pertaining to the assets of housing and public infrastructure against natural catastrophes like cyclones, earthquakes, and floods.
RMSI successfully developed several probabilistic risk models for hazard assessment, vulnerability analysis and financial implications as part of the study. The comprehensive report submitted to the World Bank consisted of various results that help in decision-making such as exposure value, average annual loss (AAL), probable maximum loss (PML), exceeding probability (EP) loss curves, and hazard/risk mapping.
The findings of the study are expected to serve as key inputs for further analysis & research related to the risk transfer and financing of catastrophe risk in India.