Engineering matters podcast – Networks under water: transport, flooding and resilience

In this episode of Engineering Matters, Fathom’s Peter Slater and Olivia Sloan together with Swiss Re’s Jackie Higgins and Rallis Kourkoulis of Grid Advisors discuss how advanced catastrophe models can help municipalities to insure against flood risks and build resilience. Here’s a summary and a few highlights.

The impacts of flooding go beyond physical damage to a site or property. Even with a commonplace event, the impacts can cascade down, leading to transport disruption, loss of business, loss of revenues and increased costs for businesses and communities.

Public sector bodies are generally responsible for providing the financing and support that helps communities recover and build resilience after a flood.

The way this is financed varies between countries. In the US, federal emergency management has historically been advanced at a federal level, but recent cuts in funding mean local governments are having to shoulder more of the financial burden. Fathom’s engineering and public sector specialist Peter Slater explains:

“Anyone responsible for owning and operating infrastructure, particularly transport infrastructure, is now looking at ways they can manage the risk of these events when they may not have the same level of funding and emergency support as previously. These organizations are looking at alternative ways to recover financially after an event happens.”

Alternative financial instruments for disaster recovery

Jackie Higgins is Head of Public Sector Solutions North America at Fathom’s parent company, the reinsurer Swiss Re. She agrees that, while the public sector has traditionally used tax revenue and the issuance of public debt to finance projects, more public entities are looking at other financial instruments, including insurance.

However, many of the clients she has worked with have found it difficult to assess and understand the complex financial impact of events, such as flooding.  She says:

“The unpredictability of the events, the inability to accurately assess them, their lack of access to data and to the models that can analyze that data make it difficult for them to understand the direct and indirect costs related to the event.”

This is where advanced flood models used in tandem with granular data come in, helping insurers and public sector bodies gain a sophisticated understanding of complex risk.

Infrastructure as a system, rather than an asset

Grid Advisors is a consultancy that has developed a tool called InfraRRed, which stands for Infrastructure Risk Reduction. This helps public sector businesses analyze the impacts of disruption and the related costs across an infrastructure network. Rallis Kourkasis, co-founder and managing partner of Grid Advisors, explains:

“InfraRRed deals with infrastructure as a system rather than isolated assets. Unlike property, for instance, where we are talking about individual housing units, a transportation network comprises several assets, with nodes linking to other types of assets. Failure of one node results in costs for repair of the node, but at the same time it results in disruption of the network.”

InfraRRed models all the complexities of a transportation network and, when informed with other datasets such as traffic, quantifies both the direct and the consequential losses of disruption across the network.

Risk reduction in action: New Jersey transportation network

The tool can also be used by local governments to better understand and quantify the risks they face. A city, for instance, might want to know how much capital reserves are needed to respond immediately to an event before state aid arrives.

Grid Advisors worked with Fathom on a pilot to demonstrate just how powerful this approach, combined with advanced flood models and high-quality data, can be in the public sector, focusing on the New Jersey Department of Transportation. Fathom’s Peter Slater says:  

“The New Jersey Department of Transportation provides good publicly available open-data and was able to share the full highway route network with Grid Advisors. With that data, combined with a high-quality hazard dataset, solid network modeling and a catastrophe model, you can begin to quantify direct physical damage and repair costs. From there, you can also start more advanced network modeling.”

The role of advanced catastrophe models 

Grid Advisors used the department of transport’s data to understand how roads are used, and how a disruption in one location can affect businesses many miles from the affected area. This was combined with Fathom’s flood catastrophe model (CAT model), to understand flood losses on the network. Olivia Sloan, Head of Catastrophe Products at Fathom, explains:

“Catastrophe models are useful for anyone who is interested in quantifying risk, so in our case, flood risk. That is looking at the impacts of flood and how that translates between the depth information to damage: the intersection between hazard and assets where the damage occurs.”

This information can then be combined with asset information, such as that provided by the New Jersey Department of Transportation, to quantify the potential risk to assets. Peter believes the pilot showed the power of these tools to understand not only individual assets, but also widespread consequential risks.

“With these new catastrophe models, which are more automated, each individual asset can have a custom vulnerability curve assigned to it. Grid Advisors have even gone to the point of breaking down, for example, a bridge into nine individual components, because each component responds differently to flooding – one might be electrical, one might be structural. Previously it was just not economically viable to conduct that assessment.”

Enabling new ways of building resilience

This type of detailed, sophisticated analysis can feed into an insurer’s assessment of the financial impact of these risks. New insurance products such as parametric insurance, with premiums and payouts based on the sort of modelling performed by Grid Advisors and Fathom, can also relieve some of the pressure on communities as the US government steps back from disaster recovery.

The modeling can also inform today’s spending and planning decisions, which, as Jackie Higgins points out to round off the podcast, is key to building resilience:

“One of the interesting things about this tool is that it’s not just looking at the disruptions at the site, it’s looking at the kind of aggregation of disruptions. It identifies areas at most risk of cascading disruptions, so municipalities can steer development towards safer zones or they can implement stricter building codes in more vulnerable areas of their city.”