Natural Catastrophe

Quake Early Warning Systems Advance

The U.S. Geological Survey is funding the development of the next generation of earthquake early warning systems.
By: | September 7, 2016 • 4 min read

The recent catastrophic earthquake in central Italy once again brings attention to the concept of an earthquake early warning system — a technology that can give people a precious few seconds to stop what they’re doing and take protective actions before the severe shaking waves from an earthquake arrive.

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To try to improve an existing (in development) U.S.-based warning system, ShakeAlert, the U.S. Geological Survey (USGS) recently awarded $3.7 million to six universities to support transitioning ShakeAlert into a full-blown production system.

According to USGS, the schools involved are the California Institute of Technology, Central Washington University, University of California, Berkeley, University of Oregon, University of Washington and University of Nevada, Reno.

In development for a decade, this impending ShakeAlert “upgrade” emphasizes the use of real-time GPS observations. Typical earthquake early warning systems use seismic data, which is not as effective as GPS technology in many cases.

The project’s goal: rapidly detect potentially damaging earthquakes, more thoroughly test the warning system, and improve its performance. In addition, they will upgrade the networks and construct new seismic and geodetic sensors to improve the speed and reliability of the warnings.

“Local seismic networks have a tough time discriminating between large [M6] and very large [M7-9] earthquakes in real-time, whereas the GPS does not, assuming one has instruments nearby the earthquake and can keep them alive and transmitting thereafter,” said Tim Melbourne, a geological sciences professor and director of the PANGA Geodesy Laboratory at Central Washington University in Ellensburg, Wash.

Earthquake Doug Given 230x300

Doug Given, Earthquake Early Warning coordinator, Caltech Seismological Lab

According to Doug Given, Earthquake Early Warning coordinator at the Caltech Seismological Lab in Pasadena, Calif., the USGS and its partners began sending live alerts to beta users in January of 2012. In February 2016, it rolled-out the next-generation ShakeAlert early warning test system in California.

USGS plans to begin sending limited public alerts by 2018 in areas where station coverage is sufficient and public educations and training has been introduced. Full operation will not be possible until full funding is secured to complete, maintain, and operate the system.

“Recording real-time, high-precision GPS ground motions is an emerging technology,” he said. “GPS sensors can stay on scale and more accurately measure large displacements of the ground during very large earthquakes, say greater than magnitude 7.”

Given cited the M9.0 Japanese earthquake in 2010. The Japanese earthquake warning system, which only uses seismic data, “saturated” at M8.1, resulting in an underestimation of the resulting ground motions.

“GPS sensors can stay on scale and more accurately measure large displacements of the ground during very large earthquakes, say greater than magnitude 7.” — Doug Given, Earthquake Early Warning coordinator, Caltech Seismological Lab

“Studies done after the earthquake have shown that a better magnitude estimate results by including GPS data,” Given said.

Would ShakeAlert, operating at full production, have an impact on commercial insurance? It’s highly possible, according to experts.

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Michael Pinsel, partner, Insurance and Financial Services group, Sidley Austin LLP

“We welcome public investments into the mitigation of earthquake risks in California, as it contributes to a more resilient society,” said Andrew Castaldi, SVP and head of catastrophe perils, Americas, with Swiss Re. “Ample warning time of a pending natural disaster is vital to saving lives.”

Castaldi explained that with meteorological events, many of which are slow moving, experts can predict and warn with a degree of accuracy — days, hours, or minutes beforehand. This keeps fatalities down in relation to property damage.

But earthquakes, and their potential for devastation, and can happen at any time, day or night.

“Early warning systems provide valuable seconds before the ground begins to shake,” he said. “Even a few seconds’ warning will provide time for first responders to prepare, for trains to decelerate, for gas pipe shutoff valves to be closed, for example. Moreover, early warning can save lives by giving people time to protect themselves [drop, cover, and hold].”

“Investment in early warning systems should not come at the cost of decreased investment in improving the resilience of infrastructure or lifelines and buildings throughout California.” — Andrew Castaldi, SVP and head of catastrophe perils, Americas, Swiss Re

Castaldi said that businesses and people that incorporate early warnings into their emergency preparedness plans can mitigate against potential fire, business interruption and casualty losses. He cautioned though, that even a system like ShakeAlert cannot reduce damage to a poorly designed building or a poorly secured piece of equipment, nor can it help compensate for the financial losses associated with the ensuing damages.

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“Investment in early warning systems should not come at the cost of decreased investment in improving the resilience of infrastructure or lifelines and buildings throughout California,” he said. “Early warnings, enforced building codes, and adequate post-event financing [earthquake insurance] will help us become more resilient to the next big earthquake.”

Michael Pinsel, a partner in the Insurance and Financial Services group at Sidley Austin LLP, in Chicago, said that advances in science, technology and early warning systems no doubt enhance the opportunities to improve the risk management of those who take advantage of such opportunities.

“Improvements in risk management ultimately should be reflected in lower loss costs and more efficient premium structures for protection buyers,” he said. “And improvements to sensor and telemetry infrastructure are also useful to the insurance industry, which often can develop efficient new coverages and risk-spreading products to help individual and business consumers manage their risks.”

Tom Starner is a freelance business writer and editor. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

2017 RIMS

Resilience in Face of Cyber

New cyber model platforms will help insurers better manage aggregation risk within their books of business.
By: | April 26, 2017 • 3 min read

As insurers become increasingly concerned about the aggregation of cyber risk exposures in their portfolios, new tools are being developed to help them better assess and manage those exposures.

One of those tools, a comprehensive cyber risk modeling application for the insurance and reinsurance markets, was announced on April 24 by AIR Worldwide.

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Last year at RIMS, AIR announced the release of the industry’s first open source deterministic cyber risk scenario, subsequently releasing a series of scenarios throughout the year, and offering the service to insurers on a consulting basis.

Its latest release, ARC– Analytics of Risk from Cyber — continues that work by offering the modeling platform for license to insurance clients for internal use rather than on a consulting basis. ARC is separate from AIR’s Touchstone platform, allowing for more flexibility in the rapidly changing cyber environment.

ARC allows insurers to get a better picture of their exposures across an entire book of business, with the help of a comprehensive industry exposure database that combines data from multiple public and commercial sources.

Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

The recent attacks on Dyn and Amazon Web Services (AWS) provide perfect examples of how the ARC platform can be used to enhance the industry’s resilience, said Scott Stransky, assistant vice president and principal scientist for AIR Worldwide.

Stransky noted that insurers don’t necessarily have visibility into which of their insureds use Dyn, Amazon Web Services, Rackspace, or other common internet services providers.

In the Dyn and AWS events, there was little insured loss because the downtime fell largely just under policy waiting periods.

But,” said Stransky, “it got our clients thinking, well it happened for a few hours – could it happen for longer? And what does that do to us if it does? … This is really where our model can be very helpful.”

The purpose of having this model is to make the world more resilient … that’s really the goal.” Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

AIR has run the Dyn incident through its model, with the parameters of a single day of downtime impacting the Fortune 1000. Then it did the same with the AWS event.

When we run Fortune 1000 for Dyn for one day, we get a half a billion dollars of loss,” said Stransky. “Taking it one step further – we’ve run the same exercise for AWS for one day, through the Fortune 1000 only, and the losses are about $3 billion.”

So once you expand it out to millions of businesses, the losses would be much higher,” he added.

The ARC platform allows insurers to assess cyber exposures including “silent cyber,” across the spectrum of business, be it D&O, E&O, general liability or property. There are 18 scenarios that can be modeled, with the capability to adjust variables broadly for a better handle on events of varying severity and scope.

Looking ahead, AIR is taking a closer look at what Stransky calls “silent silent cyber,” the complex indirect and difficult to assess or insure potential impacts of any given cyber event.

Stransky cites the 2014 hack of the National Weather Service website as an example. For several days after the hack, no satellite weather imagery was available to be fed into weather models.

Imagine there was a hurricane happening during the time there was no weather service imagery,” he said. “[So] the models wouldn’t have been as accurate; people wouldn’t have had as much advance warning; they wouldn’t have evacuated as quickly or boarded up their homes.”

It’s possible that the losses would be significantly higher in such a scenario, but there would be no way to quantify how much of it could be attributed to the cyber attack and how much was strictly the result of the hurricane itself.

It’s very, very indirect,” said Stransky, citing the recent hack of the Dallas tornado sirens as another example. Not only did the situation jam up the 911 system, potentially exacerbating any number of crisis events, but such a false alarm could lead to increased losses in the future.

The next time if there’s a real tornado, people make think, ‘Oh, its just some hack,’ ” he said. “So if there’s a real tornado, who knows what’s going to happen.”

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Modeling for “silent silent cyber” remains elusive. But platforms like ARC are a step in the right direction for ensuring the continued health and strength of the insurance industry in the face of the ever-changing specter of cyber exposure.

Because we have this model, insurers are now able to manage the risks better, to be more resilient against cyber attacks, to really understand their portfolios,” said Stransky. “So when it does happen, they’ll be able to respond, they’ll be able to pay out the claims properly, they’ll be prepared.

The purpose of having this model is to make the world more resilient … that’s really the goal.”

Additional stories from RIMS 2017:

Blockchain Pros and Cons

If barriers to implementation are brought down, blockchain offers potential for financial institutions.

Embrace the Internet of Things

Risk managers can use IoT for data analytics and other risk mitigation needs, but connected devices also offer a multitude of exposures.

Feeling Unprepared to Deal With Risks

Damage to brand and reputation ranked as the top risk concern of risk managers throughout the world.

Reviewing Medical Marijuana Claims

Liberty Mutual appears to be the first carrier to create a workflow process for evaluating medical marijuana expense reimbursement requests.

Cyber Threat Will Get More Difficult

Companies should focus on response, resiliency and recovery when it comes to cyber risks.

RIMS Conference Held in Birthplace of Insurance in US

Carriers continue their vital role of helping insureds mitigate risks and promote safety.

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]