RMS maintains a broad suite of catastrophe models to manage global earthquake risk. In my day-to-day work, I think about our current earthquake models and the scope of methodological advancements and new capabilities that will be available on RMS(one). Generally, I think globally.
But this past week, I was reminded – once again – of the earthquake risk in my own backyard. The RMS California headquarters is in the middle of Earthquake Country. The building is located approximately 5 miles from the Hayward Fault, which poses the greatest risk to the building’s site and our operations.
And Monday, October 21st marks the 145th anniversary of the 1868 Hayward Earthquake.
On October 21, 1868, a major earthquake on the Hayward Fault ruptured a section of the fault from the location of present-day Fremont to just north of Oakland.
Until the 1906 Great San Francisco Earthquake and Fire, the event on the Hayward Fault was known as the “Great San Francisco Earthquake” for the damage it caused to the major population center of San Francisco. According to U.S. census records, at the time of the 1868 earthquake, the total population of the Bay Area was about 260,000, with 150,000 people living in San Francisco. While it is difficult to know the exact amount of damage, the loss has been estimated at around $350,000 in 1868 dollars.
But what would be the impact to the highly populated Bay Area in 2013? The answer to this question requires an understanding of the people and property at risk from similar-sized earthquake 145 years later. RMS has explored the impacts of such an event in a report on the 145th anniversary of the Hayward Earthquake.
In 2013, the Hayward Fault transects the highly urbanized East Bay corridor of the San Francisco Bay Area. The Hayward Fault also crosses nearly every east-west connection that the Bay Area depends upon for water, electric, gas, and transportation. Close to 2.5 million people live on or near this fault zone, with over 7 million people at risk in the surrounding eight counties. This is over 25 times the population of the region at the time of the 1868 earthquake.
As it is assumed the next large earthquake on the Hayward Fault will likely fall within the range of M6.8 to M7.0, RMS explored six Hayward Fault scenarios developed by the USGS within the RMS U.S. Earthquake model. The RMS analysis shows that the overall economic loss to the $1.9 trillion of residential and commercial property at risk will likely range between $95 and $190 billion – beyond what has been experienced in recent California history. The distribution of losses varies significantly by scenario and is largely a function of directivity, the focusing of seismic energy in the direction of rupture.
In addition, the analysis shows that insured losses could fall between $11 and $26 billion, indicating that the massive cost of a Hayward Fault earthquake is expected to be directly borne by the residents and businesses in the area.
Much work has taken place over the past twenty years, however, to mitigate the impacts of a major Bay Area earthquake. Utilities and other infrastructure operators in the region have invested (or are investing) a total of about $20 billion to reduce the impact of future earthquakes. Most of these upgrades and retrofits will be completed by 2013 or 2014. In addition, many municipalities in the Bay Area have abandoned, retrofitted, or replaced public buildings with identified seismic risk.
While there is much to be applauded in the work that has already been undertaken, a catastrophic earthquake on the Hayward Fault would almost certainly have ripple effects throughout California and the United States. The San Francisco Bay Area has one of the highest concentrations of people and wealth in the U.S., and is recognized as a center of innovation in the country, due to the high density of venture capital firms in Silicon Valley, located along the southern part of the San Francisco Bay.
The San Francisco Bay Area’s particular vulnerability to future earthquakes drives a continuous need for dialogue between the public, government officials, business, and the insurance industry to explore new ways to manage the risk. RMS remains committed to facilitating dialogue among the various stakeholders and creating a culture of preparedness and resilience to better manage the earthquake risk in the San Francisco Bay Area.