FEMA National Risk Index

Background

Addresscloud offers comprehensive coverage of key perils for the US and these are sourced from a number of trusted, high quality data providers with a proven track record of providing data to the insurance industry.  This section focuses on a number of perils scores provided under the banner of the National Risk Index (NRI) from the Federal Emergency Management Agency (FEMA).  The scores and values you see in Addresscloud are as they are provided by FEMA without any derivations or modelling from Addresscloud.

Introduction to the NRI

The National Risk Index (NRI) developed by FEMA (Federal emergency Management Agency) aims to help visualise the risk profiles of U.S. communities concerning 18 natural hazards. The index provides a relative risk measurement for counties and Census tracts across all 50 states, the District of Columbia, and five U.S. territories. The NRI  is designed to support various stakeholders, including planners, emergency managers, and decision-makers, by aiding in emergency operations planning, resource allocation, risk communication, and community resilience efforts.

Note: the address level information provided by Addresscloud is taken from the census tract within which the address is located.  The perils scores will be the same for all other addresses within the same census tract.  Census tracts are small, relatively permanent geographic entities within counties (or the statistical equivalents of counties), generally they have between 2,500 and 8,000 residents and boundaries that follow visible features.

Background to the Index

The initiative for the National Risk Index began in 2016, aiming to establish a comprehensive, multi-hazard risk assessment. The index considers the likelihood and consequences of natural hazards along with social vulnerability and community resilience. The development process involved extensive collaboration with federal, state, and local governments, academic institutions, non-profit organisations, and private industry. Workshops and working groups were formed to define the methodologies and translate raw data into meaningful risk factors.

Natural Hazard Selection

The selection of the 18 natural hazards was based on a review of FEMA-approved State Hazard Mitigation Plans from all 50 states. These hazards include avalanches, coastal flooding, cold waves, droughts, earthquakes, hail, heat waves, hurricanes, ice storms, landslides, lightning, riverine flooding, strong winds, tornadoes, tsunamis, volcanic activity, wildfires, and winter weather. Hazards were included if they were identified in at least half of the state plans or deemed regionally significant. 

A range of key US agencies have supported the development of the NRI,  for example:

Avalanche: Data from the National Avalanche Center and historical occurrence records are used to assess the risk of avalanches in susceptible counties.

Coastal Flooding: The analysis includes high tide flooding and floodplain data from NOAA and FEMA’s Flood Insurance Rate Maps.

Earthquake: Earthquake risk is evaluated using data from the USGS and FEMA’s Hazus model, which estimates potential losses based on seismic activity.

Hurricane:The risk assessment for hurricanes incorporates data from NOAA’s National Hurricane Center and historical storm tracks.

The 18 natural hazards included in the National Risk Index and provided by Addresscloud are:

• Avalanche
• Coastal Flooding
• Cold Wave
• Drought
• Earthquake
• Hail
• Heat Wave
• Hurricane
• Ice Storm
• Landslide
• Lightning
• Riverine Flooding
• Strong Wind
• Tornado
• Tsunami
• Volcanic Activity
• Wildfire
• Winter Weather

Risk Analysis Overview

The risk analysis methodology integrates three primary components: natural hazard risk, social vulnerability, and community resilience. The index calculates Expected Annual Loss (EAL) for each hazard, which involves estimating the frequency and consequences of hazard events. This approach provides a standardised measure to compare risk levels across different communities.

In the National Risk Index, natural hazards are represented in terms of Expected Annual Loss, which incorporate data for exposure, annualised frequency, and historic loss ratio.

Social Vulnerability and Community Resilience

Social vulnerability assesses the susceptibility of social groups to harm from natural hazards. This component considers factors such as income, age, disability, and housing conditions. Community resilience evaluates the ability of a community to prepare for, respond to, and recover from hazard events. Data sources for these components include the CDC’s Social Vulnerability Index and Baseline Resilience Indicators for Communities.

Data and Methodologies

Data used in the National Risk Index are sourced from various federal and state agencies, research institutions, and existing databases. The methodology for each hazard type includes detailed steps for data collection, processing, and analysis. For example, the calculation of EAL involves determining the annualised frequency of hazard events and their potential impacts on buildings, population, and agriculture.

Expected Annual Loss (EAL) Calculation

The EAL calculation is a core part of the risk assessment. It combines the annual frequency of hazard events with the expected consequences in terms of economic loss, fatalities, and other impacts. The methodology accounts for both direct and indirect losses and uses historical data to validate the estimates.

Limitations and Assumptions

FEMA acknowledges several limitations and assumptions inherent in the risk assessment process. These include the availability and quality of data, the static nature of certain risk factors, and the exclusion of certain hazard types due to a lack of reliable data. The methodology to create the NRI also assumes that past hazard occurrences and impacts are indicative of future risks, which may not always hold true due to changing climate conditions and other factors.

Applications and Use Cases

The National Risk Index is intended to be a versatile tool for a wide range of applications. It can support the development and updating of hazard mitigation plans, inform land use planning and building code enhancements, prioritise mitigation investments, and foster public awareness and education. By providing a clear picture of relative risk, the index helps communities identify areas of greatest need and opportunities for risk reduction.

Conclusion

The National Risk Index represents a significant effort to standardise and quantify natural hazard risk across the United States. By integrating hazard data with social and resilience factors, it provides a holistic view of risk that can guide decision-making and enhance community preparedness. The comprehensive documentation ensures transparency in the methodology and encourages continuous improvement through feedback and updates.