I have a friend who just bought a house on the coast of Florida. He was telling me how he’s on a “ridge” and unlike most residents around him, he is not required by his mortgage company to have flood insurance. Rates are high, so he’s happy not have that bill. I wondered who decides this risk? And how do they decide?
The “who” in this scenario is FEMA – the Federal Emergency Management Agency. We’ll talk more about them in a later blog.
The “how” is more complicated. With disaster planning and emergency management, it’s a matter of evaluating risk and probability. Let’s exam these concepts a little closer.
Dictionary.com defines risk as the “exposure to the chance of injury or loss; a hazard or dangerous chance.”
The same website defines probability (in reference to statistics) as “the relative possibility that an event will occur, as expressed by the ratio of the number of actual occurrences to the total number of possible occurrences.”
How should you plan for a disaster? How do government agencies determine emergency management? Risks by nature are negative, but to what extent? The probability of the risk may be low, but the impact of the risk, should it occur, might be great. For example, the probability of my friend’s house actually flooding might be low, but what would be the subsequent impact if it did flood? Would he lose his house, his valuables, his sentimental possessions? Would any lives be lost? Would he be able to recover after a flood if he doesn’t have insurance to rely on?
In this case, FEMA has determined through their flood zone maps that the risk and probability makes it unnecessary to require him to have flood insurance. He can determine himself if he wants to go with that recommendation or not. Read on to our next post for another example of risk verses probability.