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Earthquakes and Risk Management in China

2008 International Conference on Risk Management & Engineering Management

David L. Olson, James & H.K. Stuart Chancellor’s Distinguished Chair

Department of Management, University of Nebraska

Desheng Dash Wu

RiskLab, University of Toronto

105 St. George Street, Toronto, Canada M5S 3E6

(416) 880-5219

E-mail: DWu@Rotman.Utoronto.Ca

Abstract:

Keywords: Risk Management; Earthquake; Sichuan Earthquake

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The magnitude of the 2008 Sichuan earthquake and its ensuing disaster bring home the power of nature, and the challenge all mankind faces in preparing for and mitigating such events. There are all kinds of disasters that threaten us, some natural (floods, hurricanes, tsunamis in addition to earthquakes); others artifacts of human inability to appropriately manage its affairs (war, terrorism).

China is of course not alone in facing the risks of earthquakes. Australia recorded insured losses of over $1 billion at Newcastle in 1989. For a detailed list of large earthquakes all over the world, please see http://en.wikipedia.org/wiki/List_of_earthquakes. Table 1 gives a list of major earthquakes in China.

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Table 1: Significant Chinese Earthquakes

Time Place Deaths Intensity Comments1036 Shanxi 23,000 ?1057 Chihli (Hopeh) 25,000 ?27 Sep 1290

Chihli (Hopeh) 100,000 6.7

23 Jan 1556 Shaanxi 830,000 ≈813 Jul 1605 Qiongshan Hainan 3,000 X1731 Beijing 100,000 ?16 Dec 1920

Ningxia-Gansu 240,000 8.6 Felt in 17 provinces; 4 cities destroyed; 10 more towns damaged

22 May 1927

Gulang Gansu 40,000 7.9 Gulang vanished; poisonous material produced

25 Dec 1932

Changma Gansu 70,000 7.6 Many aftershocks for half a year

1976 Tangshan 242,000 7.8 164,000 injured, more than 410,000 localities suffer cave breakdowns, landslide and mud-rock flows with an annual death toll of nearly 1,000; 2.62 million square kilometers of land desertified; 2,460 square kilometers of land becomes sand annually and more than 1.8 million square kilometers of land lost due to water erosion.

2 Jun 2007 Yunnan 2 6.2 Over 200 more injured, damage to houses & roads, communication

12 May 2008

Sichuan Province 87,000+ 8.0 Felt in Beijing & Shanghai; over 26,000 aftershocks, billions in damage; lots of quake lakes; direct economic loss 845.1 billion RMB

Earthquakes can be seen to have long been a feature of life in China. Similar tables could be developed for many other locations in the world. Clearly earthquakes have taken many lives in China over the centuries, and are a fact of life, just as they are in California. Table 1 demonstrates that earthquakes can involve massive loss of life (see the 1556 earthquake on the list). They also have had significant political impact (e.g., the Managua Nicaragua earthquake in 1972 has been credited with leading to the Sandinista revolution because of inadequate governmental relief response).

Earthquakes strike all around the world. In August, 2007 Peru was struck by a 7.9 magnitude earthquake shaking the cities of Ica, Pisco, and Chinca, resulting in 500 deaths and destruction of houses, churches, transportation and utilities (Shexnayder, 2007). In May

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1970, over 50,000 died in Peru from another 7.9 magnitude earthquake. Earthquakes in Japan threaten a widespread nuclear energy system. An earthquake in 2007 caused a fire at the Kashiwazaki-Kariwa Nuclear Power Plant, leading to leaking of radioactive water into the ocean. As nuclear energy becomes more attractive, environmental groups are concerned about earthquake risk in other areas of Asia, to include Indonesia, Vietnam, and Thailand (Grinberg, 2007). When facing earthquakes, technology development measures often prove ineffective and may themselves turn to a source of added vulnerability. For example, the infrastructure where we live and work can cause more deaths and injuries when they fail. In the Sichuan Earthquake, 6,898 school buildings were destroyed in the earthquake when the design standard were exceeded, causing a huge number of student deaths. Similarly, it is true that original plans from policy-makers can take little effect to reduce the vulnerability resulting from earthquakes. The earthquake victims may actually suffer from post-earthquake social and economic disruption. To effectively deal with the earthquake disaster and reduce its severity, a systematic risk management approach is necessary to consider disaster control through the whole disaster cycle. This consideration involves the economic, political and social sources of victimization and loess and the extent to which social inequality and coordination existence in the social network. In the Sichuan earthquake, poverty was a greater cause of the serious damage or Chinese living in the earthquake zone. Most buildings that collapsed were old and poorly made (China Daily, 2008). Symptoms such as a sudden loss of confidence and feelings of depersonalization could last from two to 10 years, or for a lifetime, after an event such as the Sichuan earthquake.

This paper analyzes various earthquake risk management tools and proposes our risk management approaches, to deal with post-construction issues in Sichuan earthquake in China. The rest of this paper is organized as follows. Section 2 of the paper discusses the status of earthquake preparedness in various nations. Section 3 reviews the massive Chinese response to the Sichuan earthquake. Section 4 presents a general risk management process. Section 4 discusses coping with earthquakes, to include prediction of their occurrence and planning for what to do when they occur and presents risk management in Post-Earthquake construction. Section 6 gives various earthquake risk management tools and the last section concludes the paper.

2. Status

The chief of the Office of Applied Economics of the US National Institute of Standards and Technology has proposed a three step protocol to prepare for natural disaster in the context of building construction (Marshall et al., 2004). The first step is to assess risk. Tools available to evaluate risk include standards and software products. The second step is to identify alternative risk mitigation strategies, to include engineering alternatives, management practices, and financial mechanisms. The third step is to evaluate life-cycle economic effectives of alternatives. Some organizations provide standards and software to aid in this third step.

In Europe, risk from natural disaster-triggered events is referred to as Natech (Cruz et al., 2006). One of the most recent earthquakes of significance was in Turkey in August 1999 at Kocaeli. This earthquake released over 20 hazardous material events, and caused the collapse of a concrete stack at an oil refinery, triggering multiple fires which burned for four days, leading to evacuation of thousands. Sampling identified over 100 industrial facilities

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that handled hazardous chemicals. The European Community is acting through regulations aimed at prevention and limiting consequences. Industrial facilities that store, use or handle dangerous substances are required to have major-accident prevention policies, with emergency plans for dealing with accidental chemical release. Facilities must carry out a hazard assessment, to include a process safety analysis, evaluate mitigation measure including protection of human health and the environment.

In Bulgaria, specific measures include building codes requiring earthquake resistant design. Bulgarian hazardous material measures include a hazard assessment, to include scenarios of domino effects and impacts on communities.

In France, natural disaster risk prevention includes hazard identification, risk assessment, monitoring and warning programs, prevention and mitigation policies, and regulations establishing zoning, disaster preparedness and emergency response.

Germany has an integrated system of prevention and warning systems. Each disaster triggers evaluation that is used to update regulations. Emergency response plans are required with hazard risk maps published.

In Italy, the Department of Civil Protection held a nationwide study to evaluate civil protection plans. Scenarios of direct and indirect effects on human health, the food chain, and pollution are used for planning.

Portugal deals with earthquake risk under their Regulation for Security for Structures. An in-depth study to assess seismic vulnerability was conducted in 1997, leading to an emergency contingency plan. Portugal developed a GIS-based simulator of seismic scenarios with information on geophysical, geological, housing, structural, and population data by region.

Sweden applies an all-hazards approach to risk management and emergency response. Municipalities are required to identify local risks and generate preventive measures and emergency response plans. National agencies provide supervision, tools, guidance and support.

In the United States, emergency management has a long and complex history, directed by various governmental agencies, to include the Federal Emergency Management Agency. Federal, State, and Municipality governments all have regulations and building codes. Comerio (2004) reviews policy incentives designed to steer builders to construct more disaster-resistant structures. Some policies are aimed at reducing risk through growth restrictions or land-use regulations. Other policies promote safe development through mitigation of event consequences through preparedness information, building codes, and insurance.

The State of California has a heavy history of earthquake experience. The 1994 Northridge earthquake resulted in over $12 billion in insured losses, severely damaging the insurance industry. Part of the California approach to dealing with earthquakes includes legal requirements for insurers to sell residential earthquake coverage, enacted in 1988 (Maroney et al., 2005). Special insurance pools were created to assure that coverage was provided while enabling insurers to survive.

Australia also experiences some earthquake activity, averaging losses of $Australian 144 million per year (Blong, 2004). In December 1989, Newcastle was hit by a 5.6 magnitude

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earthquake leading to damage to over 63,000 household insurance claims. Australia has done significant work in assessing the risk to residential buildings since that time. This may lead to the avoidance of some future damage through better building codes and land-use planning.

China suffers from seven major types of natural disasters: meteorological, oceanic, flood, earthquake, geological, agricultural and forestry disasters. Chinese natural disasters are characterized with variety, high frequency, great severity and widespread distribution. China has established a systematic natural disaster prevention system, to include monitoring, prediction, prevention, resistance and relief. Natural disaster reduction and control is one of the primary tasks in science and technology development from Chinese government’s point of view. Data accumulation of various natural disasters has been lasted for more than two thousand years in China. These data are collected through more than 100,000 monitoring stations over different natural disaster sites in China, where nation-wide monitoring and prediction system can be found in each site.

The earthquake monitoring and prediction network consists of about 1000 seismographic stations and earthquake precursory observatories. Many advanced technologies are employed. These include “radar transmission network for precursory data acquisition,” “mobile shortwave satellite communication system,” ”immediate response system to great earthquake,” ”mobile digital micro seismic and strong ground motion network” and “regional telemetric seismic network.” All were helpful in improving observation accuracy, fastening information transmission and increasing immediate response to Sichuan earthquake.

While earthquakes have struck world-wide throughout recorded human history, professional emergency managers argue that the level of preparedness is often inadequate (Wade, 2008).

3. Chinese Response

The International Federation of Red Cross and Red Crescent Societies (2008) has provided a three-month consolidated report as of 22 August 2008, outlining challenges and progress in response to the Sichuan earthquake. By August 12th, the Sichuan provincial government was credited by placing all displaced people in transitional housing. The magnitude of the disaster was demonstrated in the massive scope, with 4.5 million people losing homes. Of these, 978,000 were in urban households, who were placed in transitional housing, with 3,400 resettlement areas being build. In rural areas, 3.5 million received government subsidies to rebuild their own housing. Of these, 20,000 permanent homes had been completed by the time of the report, with another 175,000 homes under construction. Table 2 gives objectives and progress by relief category for the Chinese Red Cross and Red Crescent Society:

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Table 2: Red Cross & Red Crescent Society Objectives and Progress (IRCRCS 2008)

Category Objectives Activities ProgressFood & basic

items0-3 months: ensure up to

100,000 families receive food, water, sanitation

1-12 months: ensure up to 100,000 families receive food enabling move to transitional shelter

TransportationWater & sanitation units

set upWater purification

tablet distributionBase camp & satellite

stations set up

150,000 tents>120,000 quilts250,000 clothing items1.7 million mosquito

nets6,480 tons of food

Shelter 0-3 months: ensure 100,000 families receive shelter

1-12 months: provide technical support for 1,000 health centers, 1,500 schools

3-36 months: provide earthquake-resistant houses for 2,000 rural families

Deployment of Deyang base camp

Pilot projects Rural area site selectionShelter kit materials to

2,000 families

53 planes chartered to deliver tents

102,210 international tents received through end of July

Health 0-3 months: Deploy medical, first aid, psychological support teams

1-12 months: Provide technical assistance & training to health clinics

3-36 months: technical assistance & training for preparedness & service

Provided technical advice & monitoring

Provided technical advice & training in emergency health care, psychological first aid, psychological assessment

Rapid deployment of eight health professional teams on two-week rotations by the end of May

Water & sanitation

0-3 months: provide drinking water, sanitation, hygiene promotion

1-12 months: provide technical assistance & training for emergency response units

3-36 months: provide technical assistance & training for emergencies, with facilities

On-the-job training and technical support

Distributed water purification tablets

Deployed two M15 water and sanitation units

Deployed one mass sanitation unit

Rural livelihood

0-3 months: provide technical advice & training for livelihood substitution; cash & voucher transfer

1-12 months: provide livelihoods to 2,000 families

Detailed assessment of rural livelihoods

Pilot projectsGrants and materials to

2,000 families & host communities

Awaiting area stabilization

4. Risk Management Process

There are many published frameworks for risk management, which is a growing industry worldwide. Intel Corporation published their risk management process, to include elements of identification, control, transfer, and mitigation (Namyst, 2007). Intel’s philosophy is to

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categorize risks in order to predict the magnitude of risk involved, engineer measures to control each risk through avoidance or mitigation, transfer risk through insurance if appropriate, and mitigate through a claims management process to minimize cost/impact.

4.1 Identification

Potential losses are quantified for every significant source of risk. Humans tend to identify risks based on their experience, but we all know that catastrophes from new sources are always possible, so risk identification is often a matter of imagination. The type of risk also matters. For Intel, this is in terms of financial severity. For governments, cost can be a factor, but a more important element is probably loss of life. Risk identification with respect to earthquakes includes the prediction elements discussed earlier of timing, magnitude, and location. Loss modeling tools can include risk maps and analyses of risk impact and likelihood. Intel uses a detailed quantification study for specific hypothetical events and their consequences. It begins with review of loss histories, usually external to Intel in order to obtain adequate statistics. Analyses include mitigation options, with the aim of quantifying and measuring specific losses from a perilous event to more rationally establish a relative level of risk.

4.2 Establish Acceptable Level of Loss

An acceptable level of loss needs to be established. These levels of acceptability determine which types of mitigation investments are needed for specific risks. This can vary by stakeholder. Establishing such levels of loss is done by every government, almost always with some dispute from various stakeholders.

4.3 Risk Control

Once risks are identified and acceptable levels of loss established, control measures can be generated to mitigate loss exposure. In terms of earthquake risk, risk control usually manifests itself in the form of building codes to reduce the likelihood of collapse. Risk control also includes the establishment of emergency management agencies to react to earthquakes in terms of rapid delivery of rescue teams, delivery of emergency food and water, and deployment of construction equipment to alleviate damage caused by earthquakes. In the Sichuan earthquake case, this last element was demonstrated by work applied to alleviate many dangerous water pools created by earthquake rubble forming dams to major bodies of water.

4.4 Risk Transfer

Private companies have the option of transferring risk to third parties via insurance or other financial tools such as catastrophe bonds (Greenwald, 2008). Earthquake insurance is offered, but as with any insurance, the level of coverage appropriate for a given company varies widely depending upon attitudes toward risk (Goda and Hong, 2008). The cost of insurance often serves as a guide for private firms to take mitigation actions as alternatives to insurance. Governments do not have the insurance option, but must react physically to deal with risks. A great deal of research has shown how the losses are transferred from the victims to insurance companies, the government and international aid givers in developed economies, covering around 50% of the direct losses.

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5. Earthquake Risk Management Tools

There are some tools that have been developed to assist the earthquake risk management process. As we have stated, insurance is a tool that private firms and individuals can utilize to protect themselves. A number of ideas have been developed to better provide insurance coverage of disasters, to include insurance pools (Schwarze and Wagner, 2004) as well as decentralized models applying conditional value-at-risk (CVaR) (Mulvey and Erkan, 2006). National insurance system has been suggested where disaster insurance be mandatory for households and businesses in high-risk areas and urban center. However, this raises the issue of how low-income persons will cover the costs of buying necessary insurance. Wenchuan, the Earthquake Center, is a non-economically developed area and the insurance penetration rate is very lower. As a result, these tools are not appropriate for basic entities such as governments. Moreover, the distribution of earthquake loss coverage is uneven among insurance claims, public compensation and voluntary aid. In some countries, insurance plays the major role while in others public assistance and voluntary aid takes effect. Public assistance and voluntary aid are of extreme importance in Sichuan earthquake, where buying insurance is almost impossible for the poor.

There are, however, alternative tools that can help. One is to better predict. Organizations such as Risk Management Solutions Inc. offer products and services for natural hazard risk in portions of the U.S. and Canada (Windeler, 2006).

Information technology provides a very useful tool for earthquake risk management in the form of geographic information systems (GIS). In the planning phase, databases can be populated with information which can include land use models integrating earth science and socioeconomic information by locality (Bernknopf and Rabinovici, 2006). Wood and Good (2004) reported on experience with a GIS to assess the vulnerability of an Oregon port to earthquake and tsunami risk. The GIS enabled focusing on vulnerability issues, aiding decision makers to set priorities for response in light of available resources. The forecasting and monitoring system developed by the Chinese Academy of Sciences has played a major role ino the disposal process of quake lakes. It has also been reported that aviation remote sensing and broadband communications are the most import technologies that were widely employed in the Sichuan earthquake.

Information technology has been developing at a very rapid pace, creating a dynamic of its own. Many technical systems have been designed to gather, process, distribute, and analyze information in emergencies. These systems include communications and data. Tools to aid emergency planners communicate include telephones, whiteboards, and the Internet. Tools to aid in dealing with data include database systems (for efficient data organization, storage, and retrieval), data mining tools (to explore large databases), models to deal with specific problems, and combination of these resources into decision support systems to assist humans in reaching decisions quickly or expert systems to make decisions rapidly based on human expertise.

5.1 Database Systems

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A starting point to disaster recovery is collection of relevant data. Disaster information management systems (DIMS) have been developed to store such data (Ryoo and Choi, 2006). A minimum set of requirements for a DIMS are:

1. The ability to recognize and handle different disaster data sources, to include geographical information, registry information, and aid information.

2. The ability to handle disparate disaster data formats. Data can be obtained from diverse data sources to include e-mails, documents, pictures, movies, and audio files.

Some data can be gathered prior to disaster. Geographical data includes information on population, infrastructure, and natural ecosystems. Hazard information is data on the disaster event itself, to include location, severity, and probabilities. Locators are needed to track the current location of victims. Registries are needed to identify victim families, those requiring medical attention, and critical contact information concerning human resources for dealing with various aspects of a disaster. Data can come in many formats. More advanced data types include 3D and virtual reality content. Standardization reduces the difficulties of sharing information.

To prevent accidental or intentional loss of data, and to ensure efficient retrieval and distribution, a centralized data repository (such as a data warehouse) is desirable at a secure location. This will enable more efficient querying of data and thus expedite subsequent analysis. Security calls for a back-up site at a different physical location. Data at both the primary and back-up sites should be periodically monitored for accuracy and operational readiness. Some of the data stored in these systems may be sensitive, to include critical national infrastructure content concerning transportation, power, and communication networks, as well as military facilities. Individual information can also be sensitive, such as personal identification data that might lead to compromise by identity thieves (social security numbers, etc.), or sensitive medical information on individuals. Access management and encryption systems exist to safeguard such data, but these systems need to be properly implemented.

Some geographical data needs to be constantly updated for location. Critical assets may be moving quite often in a disaster situation. Part of the dynamic of life is the constant development of new technologies.

5.2 Emergency Management Support Systems

A number of software products have been marketed to support emergency management. These are often various forms of a decision support system. The Department of Homeland Security in the U.S. developed a National Incident Management System. A similar system used in Europe is the Global Emergency Management Information Network Initiative (Thompson et al., 2006). While many systems are available, there are many challenges due to unreliable inputs at one end of the spectrum, and overwhelmingly massive data content at the other extreme.

Decision support systems (DSS) have consisted of access to tailored data and customized models with real-time access for decision makers. With time, as computer technology has advanced and as the Internet has become available, there is a great deal of change in what can be accomplished. Database systems have seen tremendous advances since the original concept of DSS. Now weather data from satellites can be stored in data warehouses, as can

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masses of point-of-sale scanned information for retail organizations, and output from enterprise information systems for internal operations. Many kinds of analytic models can be applied, ranging from spreadsheet models through simulations and optimization models. DSSs can be very useful in support of emergency management. They can take the form of customized systems accessing specified data from internal and external sources as well as a variety of models suitable for specific applications needed in emergency management situations. The focus is on supporting humans making decisions. If problems can be so structured that computers can operate on their own, decision support systems evolve into expert systems. Expert systems can and have also been used to support emergency management.

Systems in place for emergency management include the U.S. National Disaster Medical System (NDMS), providing virtual centers designed as a focal point for information processing, response planning, and inter-agency coordination. Systems have been developed for forecasting earthquake impact (Aleskerov et al., 2005). This demonstrates the need for DSS support not only during emergencies, but also in the planning stage.

Information technology can be of best use in gathering and organizing data. But systems also need to be easy to use during crises. The tradeoff is that the more comprehensive the data that is contained, the more difficult they are to use. Systems supporting earthquake response need to address the following:

Damage assessment of structures after earthquakes

Lessons of post-earthquake recovery

Rehabilitation and reconstruction

Public policy

Land use options

Urban planning and design

5.3 Preparedness for Earthquake Response

The classical rational decision making model does not work well in emergency situations. That model expects decision makers to balance multiple criteria over all available alternates, assumed to be known with perfect knowledge. That model is suspect at best in normal operating conditions, but is totally unattainable in emergency contexts where developments are by definition unexpected, with no time available for data collection and consideration of tradeoffs.

A method that can aid emergency preparedness is the use of prediction markets to forecast based upon the knowledge of a large number of individuals, none of whom know everything about the topic at issue, but who in aggregate contribute a broad perspective of information. Prediction markets have been found to be quite accurate in predicting things like election results, or demand for products, and have been proposed as ways to predict the magnitude of natural disaster damage (Sunstein, 2006).

The recognition-primed decision model (RPDM) (Klein, 1993) is based on preplanned training. The framework consists of the following steps:

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1. Development of contingent response plans of action

2. Training response personnel to react to expected critical situations

3. Prepositioning resources (equipment, food, medical supplies, transportation for key response personnel and decision makers)

This approach is especially useful for emergency response teams, such as fire fighters or toxic clean-up operations. In essence, it can be viewed as pre-programming professionals to automatically act when faced with typical emergency situations, so that time is not wasted on deliberative thought. This is good, in that time is not wasted, which can be critical in environments such as heart surgery. There are decisions where deliberation should be applied, but not emergencies.

5.4 Coping with Earthquakes

We can prepare to better cope with earthquakes. There are two basic activities that can be accomplished. We can predict their occurrence, although this is admittedly one of the more difficult tasks in the field of prediction. We can also plan for what to do when they occur (Sawada, 2007). These two activities will be our focus. We will also look at some tools that have been developed to aid in this planning process.

Scientists from a number of disciplines have been involved in trying to better predict earthquakes, in terms of timing, magnitude, and location. Animals have been observed to behave strangely when earthquake activity begins. There also are theories that seismic activity might vaporize water, leading to unusual cloud patterns, or even rainbow effects. Statistical study of earthquakes falls into the area of extreme value distributions. Fortunately, earthquakes tend to be rare events for specific areas. The Wenchuan earthquake took place at 14:28:04 on May 12, 2008. Soon after that, aftershocks continued. Figure 1 gives the distribution of Sichuan earthquakes aftershocks. This indicates that earthquake historical data are far from evenly distributed over the time horizon. Traditional statistical analysis is thus complicated because it is difficult to obtain meaningful statistics over such long periods. Distributions such as Pareto or Gumbel (extreme value distribution) have been found to fit earthquake data in some cases, allowing more accurate prediction (Bogen and Jones, 2006). The bunching effect of earthquake events may motivate the employment of statistical tools from financial risk management such as backtesting with bunching. But earthquake prediction continues to be very difficult to predict, in all three terms of timing, magnitude, and location.

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Figure 1: Distribution of Sichuan Earthquake Aftershocks

Earthquake response refers to actions taken to immediately save victim lives and reduce possible damage and disruption in a very short period of time. Possible measures consist of threat detection, warning message dissemination, threatened population evacuation, trapped victim search and rescue, medical care and food and shelter provision. When an earthquake strikes, RPDM can be a good alternative tool to respond to earthquakes.

Finally, post-earthquake recovery consists of a continuum of actions taken to repair, rebuild and reconstruct properties and various social economic systems. Because post-earthquake recovery is under the way in Sichuan province of China, we address details of this issue in next section.

6. Risk Management in Post-Earthquake Construction

China has been proactive in developing effective response to natural disasters (Disaster Reduction Report of the PRC, 2008). This begins with a classification of the types of natural disasters that China faces, as given in Table 3.

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Table 3: Natural Disaster Types in China

Environment Disasters RatesAtmospheric &

AquaticFlood, drought, typhoon,

tsunami, wind, snow, ice7 typhoons per year5 million hectares per year

disastrous floodingGeological & Seismic Earthquake, cave-ins, landslides,

desertificationOver 300,000 lives since 1949Over 10 million houses

destroyedBiological Pests, rodents Over 1,400 pests

50 million tons of grainFire Forests, grasslands Average 16,000 forest fires/year

China has one of the worst impacts of natural disaster loss in the world, with over 200 million people affected annually (several thousand killed; 3 million needing resettlement, 3 million houses destroyed). Losses from natural disasters have increased with time. Typical catastrophic disasters include annual Yangtze, Songhau, and Neng River floods, an earthquake in Lijiang, Yunan in 1996, severe drought in North China from 1999 to 2001, and Huai River flooding in 2003.

6.1 Chinese Disaster Reduction

In 1989, the Chinese government created the National Commission for the International Decade on Natural Disaster Reduction, composed of 30 ministries and departments. This agency coordinates disaster activities under the direction of the State Council, which is responsible for promulgating principles, policies and plan, coordination of disaster activities, guiding local government efforts, and promoting international cooperation. China enacted a series of over 30 laws and regulations to include the Law on Earthquake Prevention and Disaster Reduction. The national disaster reduction plan emphasized prevention as a priority.

1. Major objectives were to implement key disaster reduction projects, applying disaster-reduction technology and enhancing public awareness and knowledge. A comprehensive mechanism was to be created to alleviate disaster impacts on economic and social development and to reduce economic losses and human casualties. Large scale projects have been implemented in flood-afflicted river areas, as well as in drought and pest-stricken farmland.

2. A disaster monitoring and warning system has been implemented, with 251 ground meteorological stations, 124 high-altitude monitors, and over 80 weather radars. An earthquake monitoring network was established networking 48 stations with 1,000 mobile observatories. A hydrometric network and a forest fire-fighting and pest prevention forecasting network were put in place.

3. The National Disaster Reduction Center was founded in April 2002, to share disaster information and to link technical services.

4. Small satellite constellations for environmental and disaster monitoring was approved in 2003. Satellites were planned for launching in 2006.

5. A national emergency-response plan system has been created.

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6. A material reserve system of disaster relief was improved.

7. Public awareness of disaster reduction has been raised.

Post-earthquake construction and recovery calls for systematic planning and design. Five hurdles were experienced during the post-earthquake construction and recovery in Sichuan.

Economic aspects: There was market confusion after the earthquake, and the cost of resuming production were high. There were also issues with property rights. Challenges were met with respect to business and industrial sector recovery.Social aspects: After the earthquakes, there was a need for a number of services, to include psychological reconstruction, temporary shelters during the transition phase victims, child-care, housing for those disabled and living alone, reuniting families, renewal of communities, and management of special geographical and ethnic cultural needs.

Natural impacts: The ecological environment was damaged, leading to the need to rebuilt sites, restore the ecological environment, and preserve ruins.Administrative issues: The earthquakes disrupted existing administrative divisions. A large number of government officials were precluded from normal function, and many grass-roots administrative bodies no longer existed.

Policies and laws: The disaster led to questions with respect to how to adjust policies involving financial, fiscal, taxation, land, and industrial sector management. In the process of rebuilding, immigration policy became an issue, and disaster relief laws urgently needed to be enacted.

The preceding problems are related to a great deal of economic, social, political, legal, cultural, natural environment factors. Solving such problems requires approaches integrating systematic planning and design.

Post-earthquake recovery is not only a physical outcome but also a social process that involves systematic decision making that leads to restoration and reconstruction. This process emphasizes the harmony of various social-economic systems. It views the recovery process as probabilistic and recursive and needs systematic thinking under risk and uncertainty. In the recovery process of Sichuan Province, the emphasis is sustainable development based on people-oriented rule, to create value-added, resource-saving and environment-friendly social unit by coordinating urban and rural development, regional development, economic and social development, harmonious development of man and nature, and promote the social life, regional economic, administrative, ecological environment, the legal system within quake areas.

Enterprise risk management can be used to guide the post-earthquake construction and recovery process. The concept of enterprise risk management (ERM) developed in the mid-1990s in industry, with a managerial focus. There are over 80 risk management frameworks reported worldwide, to include that of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2004. ERM is a systematic, integrated approach to managing all risks facing an organization (Dickinson, 2001). It focuses on board supervision, aiming to identify, evaluate, and manage all major corporate risks in an integrated framework (Gates and Nanes, 2006).

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Contingency management has been widely systematized in the military, although individual leaders have practiced various forms for millennia. Systematic organizational planning recently has been observed to include scenario analysis, giving executives a means of understanding what might go wrong, giving them some opportunity to prepare reaction plans. A complicating factor is that organization leadership is rarely a unified whole, but rather consists of a variety of stakeholders with potentially differing objectives.

Disasters are abrupt and calamitous events causing great damage, loss of lives, and destruction. Emergency management is accomplished in every country to some degree. Disasters occur throughout the world, in every form of natural, man-made, and combination of disaster. Disasters by definition are unexpected, and tax the ability of governments and other agencies to cope. A number of intelligence cycles have been promulgated, but all are based on the idea of:

1. Identification of what is not known;2. Collection – gathering information related to what is not known;3. Production – answering management questions;4. Dissemination – getting the answers to the right people.

7. Conclusions

Emergencies of two types can arise. One is repetitive – hurricanes have hammered the Gulf Coast of the U.S. throughout history, and will continue to do so (just as tornadoes will hit the Midwest and typhoons the Pacific). The other basic type of emergencies are surprises. These can be natural (the explosion of Krakatoa) or human-induced. We cannot hope to anticipate, nor will we find it economic to massively prepare for every surprise. We don’t think that a good asteroid-collision-prevention system would be a wise investment of our national resources. On the other hand, there is growing support for an effective global warming prevention system.

Repetitive emergencies are an example of risk – we have data to estimate probabilities. The second type is an example of uncertainty – we can’t accurately estimate probabilities for the most part. (People do provide estimates of the probability of asteroid collision, but the odds are so small that they don’t register in our minds. Global warming probabilities are near certainty, but the probability of a compensating cooling event in the near future evades calculation.)

Earthquakes are unfortunately repetitive. A great deal of experience and data can be gathered for those events. Our weather forecasting systems have done a very good job of providing warning systems for actual events over the short term of hours and days. However, humans will still be caught off-guard.

Emergency management is thus a no-win game. However, someone has to do it. They need to do the best they can in preplanning:

1. gathering and organizing data likely to be pertinent;2. developing action plans that can be implemented at the national, regional, and local

level;

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3. organizing people into teams to respond nationally, regionally, and locally, trained to identify events, and to respond with all needed systems (rescue, medical, food, transportation, control, etc.).

Two mechanisms were proposed, one to possibly better predict earthquake damage magnitude (prediction markets), the other to prepare response team performance (recognition primed decision making). In conjunction with broader use of information system technology, it may be possible to improve preparedness and response.

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