Why worry about seismic risk in the portfolio?
A recent probabilistic study [2] by FEMA utilizing HAZUS to compare earthquake risk across the United States found that over 75% of potential average annual earthquake loss ($5.3 billion) in the US is situated on the West Coast and 66% of the total potential is concentrated within the State of California. However, $1.1 billion or 23% of annualized earthquake risk is distributed throughout the remainder of the US; some in areas that are not considered as having earthquake risk by investors and the financial markets. In 2006, EQECAT conducted a study focusing on potential industry damage and loss resulting from a cascading earthquake rupture along the southern portion of the San Andreas fault and concluded that such an event could result in insured losses in excess of $27 billion on average and up to $50 billion if the Cholame/Coachella segment were to rupture. If such an event occurred, this would affect population and assets extending roughly from the City of San Bernardino in the nort
