Risk of Extreme Events Under Nonstationary Conditions

J. Rolf Olsen, James H. Lambert and Yacov Y. Haimes

Risk Analysis, 1998, vol. 18, issue 4, 497-510

Abstract: The concept of the return period is widely used in the analysis of the risk of extreme events and in engineering design. For example, a levee can be designed to protect against the 100‐year flood, the flood which on average occurs once in 100 years. Use of the return period typically assumes that the probability of occurrence of an extreme event in the current or any future year is the same. However, there is evidence that potential climate change may affect the probabilities of some extreme events such as floods and droughts. In turn, this would affect the level of protection provided by the current infrastructure. For an engineering project, the risk of an extreme event in a future year could greatly exceed the average annual risk over the design life of the project. An equivalent definition of the return period under stationary conditions is the expected waiting time before failure. This paper examines how this definition can be adapted to nonstationary conditions. Designers of flood control projects should be aware that alternative definitions of the return period imply different risk under nonstationary conditions. The statistics of extremes and extreme value distributions are useful to examine extreme event risk. This paper uses a Gumbel Type I distribution to model the probability of failure under nonstationary conditions. The probability of an extreme event under nonstationary conditions depends on the rate of change of the parameters of the underlying distribution.

Date: 1998
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Citations: View citations in EconPapers (14)

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https://doi.org/10.1111/j.1539-6924.1998.tb00364.x

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Persistent link: https://EconPapers.repec.org/RePEc:wly:riskan:v:18:y:1998:i:4:p:497-510

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