Computer system and method for determining a regional impact of earthquake events

#The present invention relates to a computer system and a method for determining a regional impact of earthquake events. Specifically, the present invention relates to a computer system and a computer-implemented method for determining parametric earthquake indices indicative of the regional or market impact of the earthquake events.

#Determining the regional impact of earthquake events is useful for getting a measure for direct and indirect regional losses from physical damages and interruptions caused by the earthquake events. Determining earthquake indices that are indicative of the regional impact of the earthquake events makes it possible to inform interested parties in a standardized fashion about the effect of earthquake events on specific geographic regions, i.e. defined geographic areas. Thus the impact of earthquake events on geographical regions can be measured for different regions with regards to a specific earthquake event and/or for one or more regions with regards to multiple earthquake events. Based on earthquake indices, it is also possible to compare and analyze the regional impact of earthquake events over different periods of time which are useful, not only when describing indices for actual historical events, but also when projecting future shifts of indices for given specific scenario cases, e.g., a scenario with hazard activity changes, or exposure/risk changes, which then can be used when building a current risk mitigation strategy. Furthermore, earthquake indices that indicate the regional impact of earthquake events make it possible to define structured financial instruments. For instance, payment based on predetermined trigger, payout pattern, and indexed loss amount would provide better transparency, smoother settlement, and more flexible coverage for clients than typical traditional insurance products. A structured regional and market parametric indices product can offer a client flexible risk transfer solutions given client specific needs such as portfolio location, and risk types and amount not only through a tailor-made product but also a combination of such standard and more reliable products. Patent applications JP 2003162641 and JP 2005158081 describe the computer-aided design of financial derivatives that are based on earthquakes. According to JP 2003162641 and JP 2005158081 a first derivative is based on the risk of an earthquake damage at the site of a target facility, primarily measured by the observed peak ground acceleration or peak ground velocity; a second derivative is based on the risk that an observation of peak ground acceleration or peak ground velocity across a predefined region affects more than a certain percentage of this region. The third derivative is based on the risk that an earthquake with a magnitude equal or higher than a given value occurs within a predefined target region. The seismic measurement values according to JP 2003162641 and JP 2005158081 are based on the peak ground acceleration (PGA) or peak ground velocity (PGV) values determined for the earthquake events.

#It is an object of this invention to provide an alternative computer system and an alternative computer-implemented method for determining the regional impact of earthquake events. In particular, it is an object of the present invention to provide a computer system and a computer-implemented method for determining parametric earthquake indices, indicative of the regional or market impact of earthquake events, based on scientific seismic measurement values having a correlation with earthquake damages that in general is assumed to be higher than the correlation of peak ground acceleration or peak ground velocity values, that is easily obtainable and, most importantly, that is substantially more intuitive to non-seismologists. Such indices have a clear advantage in that they are transparent for usage in financial instruments. Furthermore, it is an object of the present invention to provide a computer system and a computer-implemented method for determining the regional impact of earthquake events, based on seismic measurement values from a set of predefined seismological measuring stations, which are representative of the regional distribution of replacement values and the associated loss potential. It is a further object of the present invention to provide a computer system and a computer-implemented method for determining the impact of earthquake events on a region comprising multiple geographical regions that are not necessarily adjacent. It is yet a further object of the present invention to provide a computer system and a computer-implemented method for determining earthquake indices suitable for defining structured financial instruments related to multiple geographical regions that are not necessarily adjacent.

#The present invention will be explained in more detail, by way of example, with reference to the drawings in which:

#FIG. 1 shows a block diagram illustrating schematically an exemplary configuration of a computer system for practicing embodiments of the present invention, the computer system being connected to multiple seismological measuring stations located in different geographic regions.

#FIG. 2 shows a block diagram illustrating schematically an exemplary configuration of a computer system for practicing embodiments of the present invention, the computer system being configured for defining a structured financial instrument.

#In FIG. 1, reference numeral 1 refers to a computer system for determining a regional impact of earthquake events. Computer system 1 includes at least one computer with at least one processor. As illustrated schematically in FIG. 1, in addition, computer system 1 includes a data store 11 and multiple functional modules, namely control module 10, data capturing module 12, indexing module 13, user interface module 14 with user data interface 141 and user application interface 142, pricing module 15, estimating module 16, and payout module 17. The functional modules are implemented preferably as programmed software modules stored on a computer readable medium, connected fixed or removable to the processor(s) of computer system 1. One skilled in the art will understand, however, that the functional modules can also be implemented fully or in part by means of hardware.

#As is illustrated in FIG. 1, computer system 1 is connected via a telecommunications network 2 to multiple seismological measuring stations 31, 32, 33, 41, 42, 43, 51, 52, 53 and 53. The seismological measuring stations 31, 32, 33, 41, 42, 43, 51, 52, 53 are located in different geographical regions 3, 4, or 5, respectively. The geographical regions 31, 32, 33, 41, 42, 43, 51, 52, 53 are associated with a market 4, e.g. a country. Telecommunications network 2 includes a wired or wireless network, e.g. the Internet, and/or dedicated point-to-point communication lines. The data capturing module 12 is configured for data communication via telecommunications network 2 with the seismological measuring stations 31, 32, 33, 41, 42, 43, 51, 52, 53.

#Preferably, data store 11 is implemented as a database, e.g. a relational database including a database management system (DBMS). One skilled in the art will understand, however, that data store 11 may also be implemented as a data file, e.g. an electronic data spreadsheet, or as a data table within a computer program, for example. Data store 11 includes data structures and data elements representing historical and/or hypothetical earthquake events, earthquake indices, geographical regions, seismological measuring stations associated with the geographical regions, replacement values associated with the geographical regions, structured financial instruments, as well as users. The data representing a historical earthquake event includes identification information, e.g. a name and/or an event identifier, an earthquake magnitude, an event location, e.g. coordinates including latitude and longitude, and possibly an effective loss associated with the earthquake event and an instrumental intensity value such as a JMA instrumental intensity value or JMA Shindo intensity value for each and every measuring station, as long as this intensity value reaches a certain, pre-defined threshold. These intensity measures are derived either from historical observation or based on standard earthquake risk modeling techniques. The data representing earthquake may include, for specific earthquake events, regional indices associated with the regional regions, aggregate indices based on the regional indices for multiple or all the geographical regions, and/or market indices based on the regional indices and regional replacement values associated with all the geographical regions, for example. The data representing a geographical region includes a name, an identification number, location, border and/or size information, and/or a reference to a map comprising an outline of the geographical region. The data representing a seismological measuring station includes location information, a replacement value of the region surrounding the measuring station and/or a weighting factor. The data representing a structured financial instrument includes identification information of one or more of the geographical regions to be associated with the financial instrument, one or more maximum payout values for the selected geographical regions, one or more payout patterns for the selected geographical regions, and/or identification information of a user associated with the financial instrument. The data representing replacement values includes abstract or monetary values of (insured or insurable) objects such as buildings, bridges, highways, power lines, communication lines, manufacturing plants or power plants, etc., or abstract or monetary values relating to economic values created in the geographical region, e.g. by manufacturing or by selling goods to customers in the specified region.