Key Considerations in Modeling of Earthquake Risk in Turkey Fouad Bendimerad, PhD, PE Christian...

Key Considerations in Modeling of Earthquake Risk Key Considerations in Modeling of Earthquake Risk in Turkeyin Turkey

Fouad Bendimerad, PhD, PEFouad Bendimerad, PhD, PE

Christian Mortgat, PhDChristian Mortgat, PhD

Financing the Risks of Natural DisastersFinancing the Risks of Natural Disasters

World BankWorld Bank

Washington DC Washington DC

June 2-3, 2003June 2-3, 2003

© 2003 Risk © 2003 Risk Management Solutions, Management Solutions, Inc.Inc.

ConfidentialConfidential

Background Background

Present key risk modeling consideration introduced in RMS RiskLink Present key risk modeling consideration introduced in RMS RiskLink Turkey Earthquake ModelTurkey Earthquake Model

This presentation is mainly focused on impact of hazard This presentation is mainly focused on impact of hazard parameters on modeling risk around Marmara Sea Region.parameters on modeling risk around Marmara Sea Region.

Illustration of variability of Loss Exceeding Probability (LEP) and Illustration of variability of Loss Exceeding Probability (LEP) and Average Annual Loss (AAL) to residential exposure with respect to:Average Annual Loss (AAL) to residential exposure with respect to:

– Source parameters Source parameters – Rupture parametersRupture parameters– Recurrence parametersRecurrence parameters

The risk around the Marmara Sea is key to the insurance industry The risk around the Marmara Sea is key to the insurance industry because a large proportion of the exposure is in this region, and because a large proportion of the exposure is in this region, and because there is a large probability of a large earthquake hitting the because there is a large probability of a large earthquake hitting the region in the near futureregion in the near future



BackgroundBackground

RMS RiskLink Turkey Earthquake model was released RMS RiskLink Turkey Earthquake model was released commercially in July 2001commercially in July 2001

Model and its applications were presented to the Turkish insurance Model and its applications were presented to the Turkish insurance industry during a seminar in Istanbul co-organized with the industry during a seminar in Istanbul co-organized with the Association of Insurance and Reinsurance Companies of Turkey Association of Insurance and Reinsurance Companies of Turkey (TSRSB) on February 24, 2003(TSRSB) on February 24, 2003



Analysis ResolutionAnalysis Resolution

M a r m a r a S e aM a r m a r a S e a

Number of Mahalles = 922

I s t a n b u lI s t a n b u l

(Mahalle Resolution)

B l a c k S e aB l a c k S e aI s t a n b u l

The loss analysis is performed at the Mahalle (I.e., neighborhood) level. The loss analysis is performed at the Mahalle (I.e., neighborhood) level.

About 10,000 stochastic events are simulated and loss is calculated for About 10,000 stochastic events are simulated and loss is calculated for

each event. An LEP is develop from the loss to each event. AAL is each event. An LEP is develop from the loss to each event. AAL is

calculated accordinglycalculated accordingly



Earthquake ExposureEarthquake Exposure

Commercial lines constitutes the largest exposure

58% of the total earthquake exposure is located around the Marmara Sea (Cresta Zones 1 to 4) ; including 40% in Cresta 1 (Istanbul). Hence, earthquake model warrants major focus on the risk around the Marmara Sea.

Distribution of Exposure by Region

Rest of Country

42% Marmara Sea58%

Distribution of Exposure by LineIndustrial

21%

Commercial42%

TCIP23%

Residential 14%



Seismic Activity In Turkey Seismic Activity In Turkey

Earthquake risk in Turkey is characterized both by high severity and Earthquake risk in Turkey is characterized both by high severity and high frequencyhigh frequency

1999 Izmit and Duzce 1999 Izmit and Duzce earthearthquakes (M7.4 and 7.2, respectively) quakes (M7.4 and 7.2, respectively) created the largest historical lossescreated the largest historical losses

1850 to 19991850 to 1999 M>=7.0M>=7.0 M>=6.5M>=6.5

North Anatolia Fault (Turkey)North Anatolia Fault (Turkey) 1 E1 Eqq every 12 yrs every 12 yrs 1 E1 Eqq every 7 yrs every 7 yrs

San Andres Fault (California)San Andres Fault (California) 1 E1 Eqq every 30 yrs every 30 yrs 1 E1 Eqq every 13 yrs every 13 yrs

Historical Earthquakes 1850-1999Historical Earthquakes 1850-1999



Seismic Gap

Earthquake Threat to IstanbulEarthquake Threat to Istanbul

More than 10 million people and close to 60% of the economic value of More than 10 million people and close to 60% of the economic value of Turkey would be impacted by an earthquake in the Marmara Sea regionTurkey would be impacted by an earthquake in the Marmara Sea region

Max magnitude could be as high as M7.7, potentially causing major lossesMax magnitude could be as high as M7.7, potentially causing major losses

The cluster of earthquakes on the North Anatolia Fault in the last century The cluster of earthquakes on the North Anatolia Fault in the last century identifies a seismic gap around Istanbulidentifies a seismic gap around Istanbul

1912

Marmara Sea

19421939

7.8

1992

6.8

1943

7.3

1957

19441951

7.3

7.47.2

1999

1967



Historic Seismicity in the Marmara Sea Historic Seismicity in the Marmara Sea

Ambraseys (2002) identifies 54 earthquakes of M>6.8 taking place Ambraseys (2002) identifies 54 earthquakes of M>6.8 taking place in the Marmara Sea Region in the last 20 centuriesin the Marmara Sea Region in the last 20 centuries

Earthquakes seemed to take place in sequences of clusters that Earthquakes seemed to take place in sequences of clusters that repeat itself every 300 years approximatelyrepeat itself every 300 years approximately

Events Mag.

1354 7.41509 7.21719 7.41754 6.8

1766a 7.11766b 7.41855 7.11894 7.31999 7.4



Source Modeling and Rupture ModelingSource Modeling and Rupture Modeling

Three source models are considered to Three source models are considered to take into consideration uncertainty in take into consideration uncertainty in the NAFZ structure in the Marmara Seathe NAFZ structure in the Marmara Sea

Model (b)

Model (a)

Model (c)

““Cascade” rupturing (I.e., potential for rupture Cascade” rupturing (I.e., potential for rupture of more than one segment) is considered in of more than one segment) is considered in the study. Probability of cascade is the study. Probability of cascade is determined by looking at ruptures in past determined by looking at ruptures in past eventsevents



Recurrence ModelingRecurrence Modeling

In Model (a) eq. recurrence is modeled as Poisson In Model (a) eq. recurrence is modeled as Poisson

Model (b) and Model (c) consider characteristic events for M>6.5Model (b) and Model (c) consider characteristic events for M>6.5

– Characteristic events are restricted on the fault segmentsCharacteristic events are restricted on the fault segments

– M<=6.5 occur within the area source following Poisson M<=6.5 occur within the area source following Poisson

In the Northwest Strand of the MSSZ, the rate of occurrence is In the Northwest Strand of the MSSZ, the rate of occurrence is estimated using four methods:estimated using four methods:

1.1. Slip rateSlip rate

2.2. Slip rate + Time dependency (I.e., Renewal model)Slip rate + Time dependency (I.e., Renewal model)

3.3. Same as 2. + permanent stress migration due to the 1999 Same as 2. + permanent stress migration due to the 1999 earthquakesearthquakes

4.4. Same as 3. + transient stress migration due to the 1999 Same as 3. + transient stress migration due to the 1999 earthquakesearthquakes

In the Southern Strand, occurrence is based on slip rateIn the Southern Strand, occurrence is based on slip rate



Other Model ParametersOther Model Parameters

Uniform slip rate on the NAFZ is estimated at 2.4cm/year. About 2.0 Uniform slip rate on the NAFZ is estimated at 2.4cm/year. About 2.0 cm/year is assigned to the Northwest strand of the MSSZcm/year is assigned to the Northwest strand of the MSSZ

Rate are calculated while preserving the energy balance in the faultRate are calculated while preserving the energy balance in the fault

The time lapsed since the last occurrence and the average recurrence time The time lapsed since the last occurrence and the average recurrence time are based on historical data. Investigation of historical seismicity for the are based on historical data. Investigation of historical seismicity for the last 2000 yearslast 2000 years

Maximum magnitude is adjusted to take into consideration the rupture Maximum magnitude is adjusted to take into consideration the rupture length of “cascade” eventslength of “cascade” events

A background source of Mmax=6.5 is added to all models to account for A background source of Mmax=6.5 is added to all models to account for the possibility of an earthquake outside of the geometry of the defined the possibility of an earthquake outside of the geometry of the defined sourcessources

Rate of earthquake occurrence in the background source is calculated Rate of earthquake occurrence in the background source is calculated using smoothed historical seismicity using and adaptive Gaussian Kernel using smoothed historical seismicity using and adaptive Gaussian Kernel techniquetechnique



Combining ModelCombining Model

An event tree technique is used to combine different models An event tree technique is used to combine different models and calculate an event rateand calculate an event rate

WW33

GeophysicalGeophysical

PoissonPoisson

Slip Rate (Cascade)Slip Rate (Cascade)

SR + Time Dependent (Renewal)SR + Time Dependent (Renewal)

SR + TD + Permanent Stress (Interaction)SR + TD + Permanent Stress (Interaction)

(SR +TD + PS + Transient Stress)(SR +TD + PS + Transient Stress)RMSRMS

(SR + TD + PS + Transient Stress)*(SR + TD + PS + Transient Stress)*PTS PTS

w21

W22

W23

W24

WW22

WW11

Historical

Historical

Event Rate

PTSPTS

WW33


PoissonPoisson






w21

W22

W23

W24

WW22

WW11

Historical

Historical

Event Rate

PTSPTS

WW33


PoissonPoisson






w21

W22

W23

W24

WW22

WW11

Historical

Historical

Event Rate

PTSPTS

WW33


PoissonPoisson






w21

W22

W23

W24

WW22

WW11

Historical

Historical

Event Rate

PTSPTS

WW33


PoissonPoisson






w21

W22

W23

W24

WW22

WW11

Historical

Historical

Event Rate

PTSPTS


PoissonPoisson






w21

W22

W23

W24

WW22

WW11

Historical

Historical

Event Rate

PTSPTS



Probability ResultsProbability Results

(1) and (2) are similar, but there only about 1/3(1) and (2) are similar, but there only about 1/3rdrd of (6) of (6)

(3) increases probabilities significantly(3) increases probabilities significantly

(6) is very high for (6) is very high for M>=7.0, but M>=7.0, but lowest for M>=7.5lowest for M>=7.5

Stress transfer (4) Stress transfer (4) and (5) has a and (5) has a significant impactsignificant impact

0.0

1.0

2.0

3.0

4.0M>=7.0

M>=7.5



Loss ResultsLoss Results

Comparison of loss depends on the return periodComparison of loss depends on the return period

(6) does not produce the highest losses(6) does not produce the highest losses

(1) produce the lowest losses(1) produce the lowest losses ““Cascade” has a Cascade” has a

significant impact significant impact on increase losses on increase losses for the high return for the high return periodsperiods

(5) produces the (5) produces the largest losseslargest losses

0.0

1.0

2.0

3.0

4.050-YearLoss

100-YearLoss

AAL



Historical Loss ReconstructionHistorical Loss Reconstruction

Calibration is achieved by Calibration is achieved by successive approximationsuccessive approximation

Mudurnu-Adap.1967 6.0

Duzce1999 7.1

Izmit-Adap.1999 7.6

Manyas/Bandirma1964 6.0

Abant-Bolu1957 7.2

Bolu-Gerede1944 7.4

Saros Marmara1912 7.4

Havzd-Ladik1943 7.6

Erzincan1992 6.2

Erzincan1939 8.0

Erzurum1949 7.0

Malatya1905 6.8

Varto1966 6.7

Aafrine1822 7.0

South Malatya1893 7.0Adana-Ceyhan

1998 6.3

Gulcuk Gulu(1)1874 7.0

Dinar1995 6.4

Sultandazi2002 6.3Fethiye/Rhodes

1957 7.2

Lice-Bingol1971 6.7

Izmir-Cesme1949 7.0

Soke-Aydin1955 7.0

Caldiran1976 7.3

Erzurum-Kars1983 6.1



Historical Loss Validation (Residential)

0.0

0.5

1.0

1.5M

odel

ed/O

bsev

ed

Model Calibration: Model Calibration: Historical LossHistorical Loss

Eco

nom

ic L

oss

-Res

iden

tial

Eco

nom

ic L

oss

-Res

iden

tial

99 K

ocae

li (7

.4)

99 K

ocae

li (7

.4)

99 K

ocae

li (7

.4)

99 K

ocae

li (7

.4)

Ave

rage

Ave

rage

Ave

rage

Ave

rage

99 D

uzce

(7.

2)99

Duz

ce (

7.2)

99 D

uzce

(7.

2)99

Duz

ce (

7.2)

98

98 A

dan

Cey

han

Ada

n C

eyha

n (6

.2)

(6.2

)98

98

Ada

n C

eyha

nA

dan

Cey

han

(6.2

)(6

.2)

92 E

rzin

can(

6.8)

92 E

rzin

can(

6.8)

92 E

rzin

can(

6.8)

92 E

rzin

can(

6.8)



Model Calibration: Scenario AnalysisModel Calibration: Scenario Analysis

Sub_Province by Mdr

High

Medium

Low

BBCC

DD

Istanbul Max Scenario (M7.5)Istanbul Max Scenario (M7.5)



Model Calibration: Model Calibration: Industry LossesIndustry Losses

Loss LossEvent Magnitude Calculated Observed

1999 KOCAELI 7.4 $506 $410

1999 DUZCE 7.2 $124 $125

2002 Sultandagi 6.3

TCIP $.80

Non-TCIP $1.5

Repeat 1999 Kocaeli TCIP 7.4 $400

Repeat 1939 Erzincan 7.9

TCIP $57

Non-TCIP $67

Central Marmara 7.5

TCIP $1,100

Non-TCIP $2,000

Worst Case

Scenario



Ardahan

EdirneIstanbul

Kastamonu

KahramanmarasDenizli

CorumAnkara

Izmir

Bursa

Adana

GaziantepKonya

Antalya

Diyarbakir

Kayseri

Eskisehir

Sanliurfa

Malatya

Erzurum

Elazig

Izmit

Sivas

Canakkale

Van

Kargi

Erzincan

AmasyaRize

IspartaMilas

Usak

Balikesir

Alanya

Bingol

Model Validation: Model Validation: Pure PremiumPure Premium

Model Resolution allows to identifies significant differences in risk Model Resolution allows to identifies significant differences in risk within the different geographical regions of Turkeywithin the different geographical regions of Turkey

Model Resolution allows to identifies significant differences in risk Model Resolution allows to identifies significant differences in risk within the different geographical regions of Turkeywithin the different geographical regions of Turkey

Pure PremiumSub-Province Level

High

Medium

Low



Model Validation: Model Validation: Modeled OEP versus Scenario EventsModeled OEP versus Scenario Events

Model results are consistent with historical experienceModel results are consistent with historical experience

Model allows relationship between individual scenarios and probabilistic lossesModel allows relationship between individual scenarios and probabilistic losses

0.00

0.10

0.20

0.30

0.40

0.50

0 5,000,000,000 10,000,000,000 15,000,000,000 20,000,000,000 25,000,000,000

Ground up Loss (US$)

Return

Period

Loss

$billion

Equivalent

Event

250 $10 M7.5 Central Marmara

100 $7.7 M7.2 Central Marmara

50 $5 M7.0 Central Marmara

M6.8 Izmir

20 $2 M7.9 1939 Erzincan



ConclusionConclusion

Model takes into consideration all the plausible scientific Model takes into consideration all the plausible scientific assumptions assumptions

In-depth treatment of the seismo-tectonic in the regionIn-depth treatment of the seismo-tectonic in the region

Thorough calibration of hazard and vulnerability componentsThorough calibration of hazard and vulnerability components

Validation with respect to various benchmarks and historical Validation with respect to various benchmarks and historical experienceexperience

Key Considerations in Modeling of Earthquake Risk in Turkey Fouad Bendimerad, PhD, PE Christian...

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