What Physical Risk metrics are measured and how are they defined?
Answer
Physical Damage at Risk (PDaR): The PDaR describes the asset-level damage factors that were calculated from the modelling process. PDaR can be understood as the percentage of an asset’s area that is exposed and vulnerable to a hazard event.
Physical Value at Risk (PVaR): The PVaR can be understood as the total value of an asset that is exposed and vulnerable to a hazard event. It is derived by multiplying the asset’s financial information, specifically the total asset value, with PDaR.
Expected Loss: The expected annual loss from physical risk is the annualized PVaR of an asset. As the PVaR is only realized in the event of a hazard, the annualised physical risk is useful to provide a realistic expectation of physical risk for an asset to face at all times.