The Eco:Actuary Investment Planner: scaling Natural Flood Management (NFM) investments for flood risk reduction

Description

The Investment Planner is a simple online spreadsheet-based tool used during the planning stage. It answers the question an investor asks before anything else: how much intervention, of what kind, at what approximate cost, is needed to achieve a given reduction in flood risk?

The user specifies a flood reduction goal, and the planner returns the scale of the different intervention options that would deliver it, together with their approximate relative cost. It does not require a hydrological model to be built or a consultant to be commissioned, which is what makes it usable at the point when a proposition is still being scoped.

It is one component of the Eco:Actuary Toolkit, alongside the Eco:Actuary global spatial catastrophe model, which maps flood risk and exposure under current climate and IPCC scenarios and quantifies the loss mitigation delivered by natural flood management, and //Smart:, which links low-cost IoT monitoring to the understanding of that contribution. The three are designed to be used together: the catastrophe model establishes the risk and the effect of intervention, //Smart: verifies what was actually delivered, and the planner sizes the investment.

Applications to decision making in the insurance sector

Natural catastrophe models are standard equipment in the insurance industry, used to assess severity and to set premiums. The Eco:Actuary model offers a comparable assessment for interventions that a conventional catastrophe model does not represent as risk-reducing assets, and it does so with open access and global coverage. For a carrier working across several countries, a consistent methodology with a common asset database allows risk to global portfolios to be compared directly between regions.

The planner's role is upstream of that: it establishes whether the proposition being discussed is of a scale that would justify the assessment.

Added value of this modelling approach

It is open-access, globally applicable, and explicit about the effect of land use and land management on flood risk — including the water stored in soils, water bodies, canopies, floodplains and wetlands. Scenarios can be generated for IPCC climate pathways or for user-defined changes, so the same tool supports both a current-risk assessment and a forward-looking one.

What decision can be improved with this modelling approach

Whether a flood reduction target can be met by natural flood management at all, and at what cost; how large an intervention has to be; which intervention type gives the most reduction per unit of expenditure; and how much of the risk reduction needs to be achieved to offset the effect of climate change on losses.