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Optimizing Public Private Risk Transfer Systems for Flood Risk Management in the Upper Tisza Region

  • Yuri Ermoliev
  • Tatiana ErmolievaEmail author
  • Istvan Galambos
Chapter
Part of the Advances in Natural and Technological Hazards Research book series (NTHR, volume 32)

Abstract

This chapter summarizes studies on the development of a financial risk management model for floods in the Upper Tisza river region, Hungary. We focus on the evaluation of a multi-pillar flood loss-spreading program involving partial compensation to flood victims by the central government, the pooling of risks through a mandatory public-private insurance on the basis of location-specific exposures, and a contingent ex-ante credit to reinsure the pool’s liabilities. Policy analysis is guided by GIS-based catastrophe models and stochastic optimization methods with respect to location-specific risk exposures. We use economically sound risk indicators leading to convex stochastic optimization problems strongly connected with non-convex insolvency constraint and Conditional Value-at-Risk (CVaR).

Keywords

Flood risk Catastrophe modeling Natural risk insurance Stochastic optimization Contingent credit CVaR 

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Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  • Yuri Ermoliev
    • 1
  • Tatiana Ermolieva
    • 2
    Email author
  • Istvan Galambos
    • 3
  1. 1.International Institute for Applied Systems Analysis (IIASA)LaxenburgAustria
  2. 2.Ecosystems, Services and Management (ESM) ProgramInternational Institute for Applied Systems Analysis (IIASA)LaxenburgAustria
  3. 3.Center for Water SystemsUniversity of ExeterExeterUK

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