Optimum Arrangement between Natural Disasters Insurance and Risk Control

C.P. Tseng, W.L. Chiang, W.K. Hsu, S.G. Lin, C.H. Tsai, C.W. Chen, and D.M. Hung (Taiwan)


Management and economics, risk control, economic utility constrained-maximization model, disaster prevention


This paper presents an extended framework of the economic effects analysis for natural disaster risk management. For government or a private company, there are several possible actions for building risk controlling, i.e. structure retrofitting, insurance protection, alternative risk transfer and emergency planning. In addition, it is a trial to define the optimum arrangement and evaluate it. A model called economic utility constrained-maximization model is proposed. The purpose of this paper is to establish a strategy to determine the insurance and risk control plan in which consideration is given to the balance with the economic effects (e.g. decrease in damage cost) due to disaster mitigation. Furthermore, these values were compared between those risk control actions to determine the priority and provide data to help evaluate the benefit of each risk control action.

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