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Earthquakes and Risk Management in China

2008 International Conference on Risk Management & Engineering Management

David L. Olson, James & H.K. Stuart Chancellors Distinguished Chair

Department of Management, University of Nebraska

Desheng Dash Wu
RiskLab, University of Toronto
105 St. George Street, Toronto, Canada M5S 3E6
(416) 880-5219
E-mail: [email protected]

Abstract:
Keywords: Risk Management; Earthquake; Sichuan Earthquake

The magnitude of the 2008 Sichuan earthquake and its ensuing disaster bring home the power
of nature, and the challenge all mankind faces in preparing for and mitigating such events.
There are all kinds of disasters that threaten us, some natural (floods, hurricanes, tsunamis in
addition to earthquakes); others artifacts of human inability to appropriately manage its
affairs (war, terrorism).
China is of course not alone in facing the risks of earthquakes. Australia recorded insured
losses of over $1 billion at Newcastle in 1989. For a detailed list of large earthquakes all
over the world, please see http://en.wikipedia.org/wiki/List_of_earthquakes. Table 1 gives a
list of major earthquakes in China.

Table 1: Significant Chinese Earthquakes

Time
1036
1057
27 Sep
1290
23 Jan 1556
13 Jul 1605
1731
16 Dec
1920

Place
Shanxi
Chihli (Hopeh)
Chihli (Hopeh)

22 May
1927
25 Dec
1932
1976

2 Jun 2007

Yunnan

12 May
2008

Sichuan Province

Shaanxi
Qiongshan Hainan
Beijing
Ningxia-Gansu

Deaths
Intensity Comments
23,000
?
25,000
?
100,000
6.7
830,000
3,000
100,000
240,000

8
X
?
8.6

Gulang Gansu

40,000

7.9

Changma Gansu

70,000

7.6

242,000

7.8

6.2

87,000+

8.0

Tangshan

Felt in 17 provinces; 4 cities

destroyed; 10 more towns
damaged
Gulang vanished; poisonous
material produced
Many aftershocks for half a year
164,000 injured, more than
410,000 localities suffer cave
breakdowns, landslide and mudrock flows with an annual death
toll of nearly 1,000; 2.62 million
square kilometers of land
desertified; 2,460 square
kilometers of land becomes sand
annually and more than 1.8
million square kilometers of land
lost due to water erosion.
Over 200 more injured, damage
to houses & roads,
communication
Felt in Beijing & Shanghai; over
26,000 aftershocks, billions in
damage; lots of quake lakes;
direct economic loss 845.1 billion
RMB

Earthquakes can be seen to have long been a feature of life in China. Similar tables could be
developed for many other locations in the world. Clearly earthquakes have taken many lives
in China over the centuries, and are a fact of life, just as they are in California. Table 1
demonstrates that earthquakes can involve massive loss of life (see the 1556 earthquake on
the list). They also have had significant political impact (e.g., the Managua Nicaragua
earthquake in 1972 has been credited with leading to the Sandinista revolution because of
inadequate governmental relief response).
Earthquakes strike all around the world. In August, 2007 Peru was struck by a 7.9 magnitude
earthquake shaking the cities of Ica, Pisco, and Chinca, resulting in 500 deaths and
destruction of houses, churches, transportation and utilities (Shexnayder, 2007). In May
1970, over 50,000 died in Peru from another 7.9 magnitude earthquake. Earthquakes in

Japan threaten a widespread nuclear energy system. An earthquake in 2007 caused a fire at
the Kashiwazaki-Kariwa Nuclear Power Plant, leading to leaking of radioactive water into
the ocean. As nuclear energy becomes more attractive, environmental groups are concerned
about earthquake risk in other areas of Asia, to include Indonesia, Vietnam, and Thailand
(Grinberg, 2007).
When facing earthquakes, technology development measures often prove ineffective and may
themselves turn to a source of added vulnerability. For example, the infrastructure where we
live and work can cause more deaths and injuries when they fail. In the Sichuan Earthquake,
6,898 school buildings were destroyed in the earthquake when the design standard were
exceeded, causing a huge number of student deaths. Similarly, it is true that original plans
from policy-makers can take little effect to reduce the vulnerability resulting from
earthquakes. The earthquake victims may actually suffer from post-earthquake social and
economic disruption. To effectively deal with the earthquake disaster and reduce its severity,
a systematic risk management approach is necessary to consider disaster control through the
whole disaster cycle. This consideration involves the economic, political and social sources
of victimization and loess and the extent to which social inequality and coordination
existence in the social network. In the Sichuan earthquake, poverty was a greater cause of the
serious damage or Chinese living in the earthquake zone. Most buildings that collapsed were
old and poorly made (China Daily, 2008). Symptoms such as a sudden loss of confidence and
feelings of depersonalization could last from two to 10 years, or for a lifetime, after an event
such as the Sichuan earthquake.
This paper analyzes various earthquake risk management tools and proposes our risk
management approaches, to deal with post-construction issues in Sichuan earthquake in
China. The rest of this paper is organized as follows. Section 2 of the paper discusses the
status of earthquake preparedness in various nations. Section 3 reviews the massive Chinese
response to the Sichuan earthquake. Section 4 presents a general risk management process.
Section 4 discusses coping with earthquakes, to include prediction of their occurrence and
planning for what to do when they occur and presents risk management in Post-Earthquake
construction. Section 6 gives various earthquake risk management tools and the last section
concludes the paper.
2. Status
The chief of the Office of Applied Economics of the US National Institute of Standards and
Technology has proposed a three step protocol to prepare for natural disaster in the context of
building construction (Marshall et al., 2004). The first step is to assess risk. Tools available
to evaluate risk include standards and software products. The second step is to identify
alternative risk mitigation strategies, to include engineering alternatives, management
practices, and financial mechanisms. The third step is to evaluate life-cycle economic
effectives of alternatives. Some organizations provide standards and software to aid in this
third step.
In Europe, risk from natural disaster-triggered events is referred to as Natech (Cruz et al.,
2006). One of the most recent earthquakes of significance was in Turkey in August 1999 at
Kocaeli. This earthquake released over 20 hazardous material events, and caused the collapse
of a concrete stack at an oil refinery, triggering multiple fires which burned for four days,
leading to evacuation of thousands. Sampling identified over 100 industrial facilities that
handled hazardous chemicals. The European Community is acting through regulations aimed
at prevention and limiting consequences. Industrial facilities that store, use or handle

dangerous substances are required to have major-accident prevention policies, with

emergency plans for dealing with accidental chemical release. Facilities must carry out a
hazard assessment, to include a process safety analysis, evaluate mitigation measure
including protection of human health and the environment.
In Bulgaria, specific measures include building codes requiring earthquake resistant design.
Bulgarian hazardous material measures include a hazard assessment, to include scenarios of
domino effects and impacts on communities.
In France, natural disaster risk prevention includes hazard identification, risk assessment,
monitoring and warning programs, prevention and mitigation policies, and regulations
establishing zoning, disaster preparedness and emergency response.
Germany has an integrated system of prevention and warning systems. Each disaster triggers
evaluation that is used to update regulations. Emergency response plans are required with
hazard risk maps published.
In Italy, the Department of Civil Protection held a nationwide study to evaluate civil
protection plans. Scenarios of direct and indirect effects on human health, the food chain,
and pollution are used for planning.
Portugal deals with earthquake risk under their Regulation for Security for Structures. An indepth study to assess seismic vulnerability was conducted in 1997, leading to an emergency
contingency plan. Portugal developed a GIS-based simulator of seismic scenarios with
information on geophysical, geological, housing, structural, and population data by region.
Sweden applies an all-hazards approach to risk management and emergency response.
Municipalities are required to identify local risks and generate preventive measures and
emergency response plans. National agencies provide supervision, tools, guidance and
support.
In the United States, emergency management has a long and complex history, directed by
various governmental agencies, to include the Federal Emergency Management Agency.
Federal, State, and Municipality governments all have regulations and building codes.
Comerio (2004) reviews policy incentives designed to steer builders to construct more
disaster-resistant structures. Some policies are aimed at reducing risk through growth
restrictions or land-use regulations. Other policies promote safe development through
mitigation of event consequences through preparedness information, building codes, and
insurance.
The State of California has a heavy history of earthquake experience. The 1994 Northridge
earthquake resulted in over $12 billion in insured losses, severely damaging the insurance
industry. Part of the California approach to dealing with earthquakes includes legal
requirements for insurers to sell residential earthquake coverage, enacted in 1988 (Maroney
et al., 2005). Special insurance pools were created to assure that coverage was provided
while enabling insurers to survive.
Australia also experiences some earthquake activity, averaging losses of $Australian 144
million per year (Blong, 2004). In December 1989, Newcastle was hit by a 5.6 magnitude
earthquake leading to damage to over 63,000 household insurance claims. Australia has done
significant work in assessing the risk to residential buildings since that time. This may lead to
the avoidance of some future damage through better building codes and land-use planning.

China suffers from seven major types of natural disasters: meteorological, oceanic, flood,
earthquake, geological, agricultural and forestry disasters. Chinese natural disasters are
characterized with variety, high frequency, great severity and widespread distribution. China
has established a systematic natural disaster prevention system, to include monitoring,
prediction, prevention, resistance and relief. Natural disaster reduction and control is one of
the primary tasks in science and technology development from Chinese governments point
of view. Data accumulation of various natural disasters has been lasted for more than two
thousand years in China. These data are collected through more than 100,000 monitoring
stations over different natural disaster sites in China, where nation-wide monitoring and
prediction system can be found in each site.
The earthquake monitoring and prediction network consists of about 1000 seismographic
stations and earthquake precursory observatories. Many advanced technologies are employed.
These include radar transmission network for precursory data acquisition, mobile
shortwave satellite communication system, immediate response system to great
earthquake, mobile digital micro seismic and strong ground motion network and regional
telemetric seismic network. All were helpful in improving observation accuracy, fastening
information transmission and increasing immediate response to Sichuan earthquake.
While earthquakes have struck world-wide throughout recorded human history, professional
emergency managers argue that the level of preparedness is often inadequate (Wade, 2008).

3. Chinese Response
The International Federation of Red Cross and Red Crescent Societies (2008) has provided a
three-month consolidated report as of 22 August 2008, outlining challenges and progress in
response to the Sichuan earthquake. By August 12th, the Sichuan provincial government was
credited by placing all displaced people in transitional housing. The magnitude of the
disaster was demonstrated in the massive scope, with 4.5 million people losing homes. Of
these, 978,000 were in urban households, who were placed in transitional housing, with 3,400
resettlement areas being build. In rural areas, 3.5 million received government subsidies to
rebuild their own housing. Of these, 20,000 permanent homes had been completed by the
time of the report, with another 175,000 homes under construction. Table 2 gives objectives
and progress by relief category for the Chinese Red Cross and Red Crescent Society:

Table 2: Red Cross & Red Crescent Society Objectives and Progress (IRCRCS 2008)
Category
Food &
basic
items

Objectives
0-3 months: ensure up to
100,000 families receive
food, water, sanitation
1-12 months: ensure up to
100,000 families receive
food enabling move to
transitional shelter

Shelter

0-3 months: ensure

100,000 families receive
shelter
1-12 months: provide
technical support for
1,000 health centers,
1,500 schools
3-36 months: provide
earthquake-resistant
houses for 2,000 rural
families
0-3 months: Deploy
medical, first aid,
psychological support
teams
1-12 months: Provide
technical assistance &
training to health clinics
3-36 months: technical
assistance & training for
preparedness & service
0-3 months: provide
drinking water,
sanitation, hygiene
promotion
1-12 months: provide
technical assistance &
training for emergency
response units
3-36 months: provide
technical assistance &
training for emergencies,
with facilities
0-3 months: provide
technical advice &
training for livelihood
substitution; cash &
voucher transfer
1-12 months: provide
livelihoods to 2,000
families

Health

Water &
sanitatio
n

Rural
livelihoo
d

Activities
Transportation
Water & sanitation
units set up
Water purification
tablet distribution
Base camp &
satellite stations
set up
Deployment of
Deyang base
camp
Pilot projects
Rural area site
selection
Shelter kit
materials to 2,000
families

Progress
150,000 tents
>120,000 quilts
250,000 clothing
items
1.7 million
mosquito nets
6,480 tons of food

Provided technical
advice &
monitoring
Provided technical
advice & training
in emergency
health care,
psychological first
aid, psychological
assessment
On-the-job training
and technical
support

Rapid deployment
of eight health
professional
teams on twoweek rotations by
the end of May

Detailed
assessment of
rural livelihoods
Pilot projects
Grants and
materials to 2,000
families & host
communities

Awaiting area
stabilization

53 planes chartered
to deliver tents
102,210
international tents
received through
end of July

Distributed water
purification
tablets
Deployed two M15
water and
sanitation units
Deployed one mass
sanitation unit

4. Risk Management Process

There are many published frameworks for risk management, which is a growing industry
worldwide. Intel Corporation published their risk management process, to include elements
of identification, control, transfer, and mitigation (Namyst, 2007). Intels philosophy is to
categorize risks in order to predict the magnitude of risk involved, engineer measures to
control each risk through avoidance or mitigation, transfer risk through insurance if
appropriate, and mitigate through a claims management process to minimize cost/impact.
4.1 Identification
Potential losses are quantified for every significant source of risk. Humans tend to identify
risks based on their experience, but we all know that catastrophes from new sources are
always possible, so risk identification is often a matter of imagination. The type of risk also
matters. For Intel, this is in terms of financial severity. For governments, cost can be a
factor, but a more important element is probably loss of life. Risk identification with respect
to earthquakes includes the prediction elements discussed earlier of timing, magnitude, and
location. Loss modeling tools can include risk maps and analyses of risk impact and
likelihood. Intel uses a detailed quantification study for specific hypothetical events and their
consequences. It begins with review of loss histories, usually external to Intel in order to
obtain adequate statistics. Analyses include mitigation options, with the aim of quantifying
and measuring specific losses from a perilous event to more rationally establish a relative
level of risk.
4.2 Establish Acceptable Level of Loss
An acceptable level of loss needs to be established. These levels of acceptability determine
which types of mitigation investments are needed for specific risks. This can vary by
stakeholder. Establishing such levels of loss is done by every government, almost always
with some dispute from various stakeholders.
4.3 Risk Control
Once risks are identified and acceptable levels of loss established, control measures can be
generated to mitigate loss exposure. In terms of earthquake risk, risk control usually
manifests itself in the form of building codes to reduce the likelihood of collapse. Risk
control also includes the establishment of emergency management agencies to react to
earthquakes in terms of rapid delivery of rescue teams, delivery of emergency food and water,
and deployment of construction equipment to alleviate damage caused by earthquakes. In the
Sichuan earthquake case, this last element was demonstrated by work applied to alleviate
many dangerous water pools created by earthquake rubble forming dams to major bodies of
water.
4.4 Risk Transfer
Private companies have the option of transferring risk to third parties via insurance or other
financial tools such as catastrophe bonds (Greenwald, 2008). Earthquake insurance is
offered, but as with any insurance, the level of coverage appropriate for a given company
varies widely depending upon attitudes toward risk (Goda and Hong, 2008). The cost of
insurance often serves as a guide for private firms to take mitigation actions as alternatives to
insurance. Governments do not have the insurance option, but must react physically to deal
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with risks. A great deal of research has shown how the losses are transferred from the victims
to insurance companies, the government and international aid givers in developed economies,
covering around 50% of the direct losses.

5. Earthquake Risk Management Tools

There are some tools that have been developed to assist the earthquake risk management
process. As we have stated, insurance is a tool that private firms and individuals can utilize
to protect themselves. A number of ideas have been developed to better provide insurance
coverage of disasters, to include insurance pools (Schwarze and Wagner, 2004) as well as
decentralized models applying conditional value-at-risk (CVaR) (Mulvey and Erkan, 2006).
National insurance system has been suggested where disaster insurance be mandatory for
households and businesses in high-risk areas and urban center. However, this raises the issue
of how low-income persons will cover the costs of buying necessary insurance. Wenchuan,
the Earthquake Center, is a non-economically developed area and the insurance penetration
rate is very lower. As a result, these tools are not appropriate for basic entities such as
governments. Moreover, the distribution of earthquake loss coverage is uneven among
insurance claims, public compensation and voluntary aid. In some countries, insurance plays
the major role while in others public assistance and voluntary aid takes effect. Public
assistance and voluntary aid are of extreme importance in Sichuan earthquake, where buying
insurance is almost impossible for the poor.
There are, however, alternative tools that can help. One is to better predict. Organizations
such as Risk Management Solutions Inc. offer products and services for natural hazard risk in
portions of the U.S. and Canada (Windeler, 2006).
Information technology provides a very useful tool for earthquake risk management in the
form of geographic information systems (GIS). In the planning phase, databases can be
populated with information which can include land use models integrating earth science and
socioeconomic information by locality (Bernknopf and Rabinovici, 2006). Wood and Good
(2004) reported on experience with a GIS to assess the vulnerability of an Oregon port to
earthquake and tsunami risk. The GIS enabled focusing on vulnerability issues, aiding
decision makers to set priorities for response in light of available resources. The forecasting
and monitoring system developed by the Chinese Academy of Sciences has played a major
role ino the disposal process of quake lakes. It has also been reported that aviation remote
sensing and broadband communications are the most import technologies that were widely
employed in the Sichuan earthquake.
Information technology has been developing at a very rapid pace, creating a dynamic of its
own. Many technical systems have been designed to gather, process, distribute, and analyze
information in emergencies. These systems include communications and data. Tools to aid
emergency planners communicate include telephones, whiteboards, and the Internet. Tools to
aid in dealing with data include database systems (for efficient data organization, storage, and
retrieval), data mining tools (to explore large databases), models to deal with specific
problems, and combination of these resources into decision support systems to assist humans
in reaching decisions quickly or expert systems to make decisions rapidly based on human
expertise.

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5.1 Database Systems

A starting point to disaster recovery is collection of relevant data. Disaster information
management systems (DIMS) have been developed to store such data (Ryoo and Choi, 2006).
A minimum set of requirements for a DIMS are:
1. The ability to recognize and handle different disaster data sources, to include
geographical information, registry information, and aid information.
2. The ability to handle disparate disaster data formats. Data can be obtained from
diverse data sources to include e-mails, documents, pictures, movies, and audio files.
Some data can be gathered prior to disaster. Geographical data includes information on
population, infrastructure, and natural ecosystems. Hazard information is data on the disaster
event itself, to include location, severity, and probabilities. Locators are needed to track the
current location of victims. Registries are needed to identify victim families, those requiring
medical attention, and critical contact information concerning human resources for dealing
with various aspects of a disaster. Data can come in many formats. More advanced data
types include 3D and virtual reality content. Standardization reduces the difficulties of
sharing information.
To prevent accidental or intentional loss of data, and to ensure efficient retrieval and
distribution, a centralized data repository (such as a data warehouse) is desirable at a secure
location. This will enable more efficient querying of data and thus expedite subsequent
analysis. Security calls for a back-up site at a different physical location. Data at both the
primary and back-up sites should be periodically monitored for accuracy and operational
readiness. Some of the data stored in these systems may be sensitive, to include critical
national infrastructure content concerning transportation, power, and communication
networks, as well as military facilities. Individual information can also be sensitive, such as
personal identification data that might lead to compromise by identity thieves (social security
numbers, etc.), or sensitive medical information on individuals. Access management and
encryption systems exist to safeguard such data, but these systems need to be properly
implemented.
Some geographical data needs to be constantly updated for location. Critical assets may be
moving quite often in a disaster situation. Part of the dynamic of life is the constant
development of new technologies.
5.2 Emergency Management Support Systems
A number of software products have been marketed to support emergency management.
These are often various forms of a decision support system. The Department of Homeland
Security in the U.S. developed a National Incident Management System. A similar system
used in Europe is the Global Emergency Management Information Network Initiative
(Thompson et al., 2006). While many systems are available, there are many challenges due
to unreliable inputs at one end of the spectrum, and overwhelmingly massive data content at
the other extreme.
Decision support systems (DSS) have consisted of access to tailored data and customized
models with real-time access for decision makers. With time, as computer technology has

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advanced and as the Internet has become available, there is a great deal of change in what can
be accomplished. Database systems have seen tremendous advances since the original
concept of DSS. Now weather data from satellites can be stored in data warehouses, as can
masses of point-of-sale scanned information for retail organizations, and output from
enterprise information systems for internal operations. Many kinds of analytic models can be
applied, ranging from spreadsheet models through simulations and optimization models.
DSSs can be very useful in support of emergency management. They can take the form of
customized systems accessing specified data from internal and external sources as well as a
variety of models suitable for specific applications needed in emergency management
situations. The focus is on supporting humans making decisions. If problems can be so
structured that computers can operate on their own, decision support systems evolve into
expert systems. Expert systems can and have also been used to support emergency
management.
Systems in place for emergency management include the U.S. National Disaster Medical
System (NDMS), providing virtual centers designed as a focal point for information
processing, response planning, and inter-agency coordination. Systems have been developed
for forecasting earthquake impact (Aleskerov et al., 2005). This demonstrates the need for
DSS support not only during emergencies, but also in the planning stage.
Information technology can be of best use in gathering and organizing data. But systems also
need to be easy to use during crises. The tradeoff is that the more comprehensive the data
that is contained, the more difficult they are to use. Systems supporting earthquake response
need to address the following:

Damage assessment of structures after earthquakes

Lessons of post-earthquake recovery

Rehabilitation and reconstruction

Public policy

Land use options

Urban planning and design

5.3 Preparedness for Earthquake Response

The classical rational decision making model does not work well in emergency situations.
That model expects decision makers to balance multiple criteria over all available alternates,
assumed to be known with perfect knowledge. That model is suspect at best in normal
operating conditions, but is totally unattainable in emergency contexts where developments
are by definition unexpected, with no time available for data collection and consideration of
tradeoffs.
A method that can aid emergency preparedness is the use of prediction markets to forecast
based upon the knowledge of a large number of individuals, none of whom know everything
about the topic at issue, but who in aggregate contribute a broad perspective of information.
Prediction markets have been found to be quite accurate in predicting things like election
results, or demand for products, and have been proposed as ways to predict the magnitude of
natural disaster damage (Sunstein, 2006).

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The recognition-primed decision model (RPDM) (Klein, 1993) is based on preplanned

training. The framework consists of the following steps:
1. Development of contingent response plans of action
2. Training response personnel to react to expected critical situations
3. Prepositioning resources (equipment, food, medical supplies, transportation for key
response personnel and decision makers)
This approach is especially useful for emergency response teams, such as fire fighters or toxic
clean-up operations. In essence, it can be viewed as pre-programming professionals to
automatically act when faced with typical emergency situations, so that time is not wasted on
deliberative thought. This is good, in that time is not wasted, which can be critical in
environments such as heart surgery. There are decisions where deliberation should be
applied, but not emergencies.
5.4 Coping with Earthquakes
We can prepare to better cope with earthquakes. There are two basic activities that can be
accomplished. We can predict their occurrence, although this is admittedly one of the more
difficult tasks in the field of prediction. We can also plan for what to do when they occur
(Sawada, 2007). These two activities will be our focus. We will also look at some tools that
have been developed to aid in this planning process.
Scientists from a number of disciplines have been involved in trying to better predict
earthquakes, in terms of timing, magnitude, and location. Animals have been observed to
behave strangely when earthquake activity begins. There also are theories that seismic
activity might vaporize water, leading to unusual cloud patterns, or even rainbow effects.
Statistical study of earthquakes falls into the area of extreme value distributions. Fortunately,
earthquakes tend to be rare events for specific areas. The Wenchuan earthquake took place at
14:28:04 on May 12, 2008. Soon after that, aftershocks continued. Figure 1 gives the
distribution of Sichuan earthquakes aftershocks. This indicates that earthquake historical data
are far from evenly distributed over the time horizon. Traditional statistical analysis is thus
complicated because it is difficult to obtain meaningful statistics over such long periods.
Distributions such as Pareto or Gumbel (extreme value distribution) have been found to fit
earthquake data in some cases, allowing more accurate prediction (Bogen and Jones, 2006).
The bunching effect of earthquake events may motivate the employment of statistical tools
from financial risk management such as backtesting with bunching. But earthquake
prediction continues to be very difficult to predict, in all three terms of timing, magnitude,
and location.

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Figure 1: Distribution of Sichuan Earthquake Aftershocks

Earthquake response refers to actions taken to immediately save victim lives and reduce
possible damage and disruption in a very short period of time. Possible measures consist of
threat detection, warning message dissemination, threatened population evacuation, trapped
victim search and rescue, medical care and food and shelter provision. When an earthquake
strikes, RPDM can be a good alternative tool to respond to earthquakes.
Finally, post-earthquake recovery consists of a continuum of actions taken to repair, rebuild
and reconstruct properties and various social economic systems. Because post-earthquake
recovery is under the way in Sichuan province of China, we address details of this issue in
next section.
6. Risk Management in Post-Earthquake Construction
China has been proactive in developing effective response to natural disasters (Disaster
Reduction Report of the PRC, 2008). This begins with a classification of the types of natural
disasters that China faces, as given in Table 3.

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Table 3: Natural Disaster Types in China

Environment
Atmospheric &
Aquatic
Geological &
Seismic

Disasters
Flood, drought, typhoon,
tsunami, wind, snow,
ice
Earthquake, cave-ins,
landslides,
desertification

Biological

Pests, rodents

Fire

Forests, grasslands

Rates
7 typhoons per year
5 million hectares per year
disastrous flooding
Over 300,000 lives since
1949
Over 10 million houses
destroyed
Over 1,400 pests
50 million tons of grain
Average 16,000 forest
fires/year

China has one of the worst impacts of natural disaster loss in the world, with over 200 million
people affected annually (several thousand killed; 3 million needing resettlement, 3 million
houses destroyed). Losses from natural disasters have increased with time. Typical
catastrophic disasters include annual Yangtze, Songhau, and Neng River floods, an
earthquake in Lijiang, Yunan in 1996, severe drought in North China from 1999 to 2001, and
Huai River flooding in 2003.

6.1 Chinese Disaster Reduction

In 1989, the Chinese government created the National Commission for the International
Decade on Natural Disaster Reduction, composed of 30 ministries and departments. This
agency coordinates disaster activities under the direction of the State Council, which is
responsible for promulgating principles, policies and plan, coordination of disaster activities,
guiding local government efforts, and promoting international cooperation. China enacted a
series of over 30 laws and regulations to include the Law on Earthquake Prevention and
Disaster Reduction. The national disaster reduction plan emphasized prevention as a priority.
1. Major objectives were to implement key disaster reduction projects, applying disasterreduction technology and enhancing public awareness and knowledge. A
comprehensive mechanism was to be created to alleviate disaster impacts on
economic and social development and to reduce economic losses and human
casualties. Large scale projects have been implemented in flood-afflicted river areas,
as well as in drought and pest-stricken farmland.
2. A disaster monitoring and warning system has been implemented, with 251 ground
meteorological stations, 124 high-altitude monitors, and over 80 weather radars. An
earthquake monitoring network was established networking 48 stations with 1,000
mobile observatories. A hydrometric network and a forest fire-fighting and pest
prevention forecasting network were put in place.
3. The National Disaster Reduction Center was founded in April 2002, to share disaster
information and to link technical services.
4. Small satellite constellations for environmental and disaster monitoring was approved
in 2003. Satellites were planned for launching in 2006.
5. A national emergency-response plan system has been created.
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6. A material reserve system of disaster relief was improved.

7. Public awareness of disaster reduction has been raised.
Post-earthquake construction and recovery calls for systematic planning and design. Five
hurdles were experienced during the post-earthquake construction and recovery in Sichuan.
Economic aspects: There was market confusion after the earthquake, and the cost of resuming
production were high. There were also issues with property rights. Challenges were met
with respect to business and industrial sector recovery.
Social aspects: After the earthquakes, there was a need for a number of services, to include
psychological reconstruction, temporary shelters during the transition phase victims, childcare, housing for those disabled and living alone, reuniting families, renewal of communities,
and management of special geographical and ethnic cultural needs.
Natural impacts: The ecological environment was damaged, leading to the need to rebuilt
sites, restore the ecological environment, and preserve ruins.
Administrative issues: The earthquakes disrupted existing administrative divisions. A large
number of government officials were precluded from normal function, and many grass-roots
administrative bodies no longer existed.
Policies and laws: The disaster led to questions with respect to how to adjust policies
involving financial, fiscal, taxation, land, and industrial sector management. In the process of
rebuilding, immigration policy became an issue, and disaster relief laws urgently needed to be
enacted.
The preceding problems are related to a great deal of economic, social, political, legal,
cultural, natural environment factors. Solving such problems requires approaches integrating
systematic planning and design.
Post-earthquake recovery is not only a physical outcome but also a social process that
involves systematic decision making that leads to restoration and reconstruction. This process
emphasizes the harmony of various social-economic systems. It views the recovery process
as probabilistic and recursive and needs systematic thinking under risk and uncertainty. In the
recovery process of Sichuan Province, the emphasis is sustainable development based on
people-oriented rule, to create value-added, resource-saving and environment-friendly social
unit by coordinating urban and rural development, regional development, economic and
social development, harmonious development of man and nature, and promote the social life,
regional economic, administrative, ecological environment, the legal system within quake
areas.

Enterprise risk management can be used to guide the post-earthquake construction and
recovery process. The concept of enterprise risk management (ERM) developed in the mid1990s in industry, with a managerial focus. There are over 80 risk management frameworks
reported worldwide, to include that of the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) 2004. ERM is a systematic, integrated approach to
managing all risks facing an organization (Dickinson, 2001). It focuses on board supervision,
aiming to identify, evaluate, and manage all major corporate risks in an integrated framework
(Gates and Nanes, 2006).

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Contingency management has been widely systematized in the military, although

individual leaders have practiced various forms for millennia. Systematic organizational
planning recently has been observed to include scenario analysis, giving executives a means
of understanding what might go wrong, giving them some opportunity to prepare reaction
plans. A complicating factor is that organization leadership is rarely a unified whole, but
rather consists of a variety of stakeholders with potentially differing objectives.
Disasters are abrupt and calamitous events causing great damage, loss of lives, and
destruction. Emergency management is accomplished in every country to some degree.
Disasters occur throughout the world, in every form of natural, man-made, and combination
of disaster. Disasters by definition are unexpected, and tax the ability of governments and
other agencies to cope. A number of intelligence cycles have been promulgated, but all are
based on the idea of:
1.
2.
3.
4.

Identification of what is not known;

Collection gathering information related to what is not known;
Production answering management questions;
Dissemination getting the answers to the right people.

7. Conclusions
Emergencies of two types can arise. One is repetitive hurricanes have hammered the Gulf
Coast of the U.S. throughout history, and will continue to do so (just as tornadoes will hit the
Midwest and typhoons the Pacific). The other basic type of emergencies are surprises. These
can be natural (the explosion of Krakatoa) or human-induced. We cannot hope to anticipate,
nor will we find it economic to massively prepare for every surprise. We dont think that a
good asteroid-collision-prevention system would be a wise investment of our national
resources. On the other hand, there is growing support for an effective global warming
prevention system.
Repetitive emergencies are an example of risk we have data to estimate probabilities. The
second type is an example of uncertainty we cant accurately estimate probabilities for the
most part. (People do provide estimates of the probability of asteroid collision, but the odds
are so small that they dont register in our minds. Global warming probabilities are near
certainty, but the probability of a compensating cooling event in the near future evades
calculation.)
Earthquakes are unfortunately repetitive. A great deal of experience and data can be gathered
for those events. Our weather forecasting systems have done a very good job of providing
warning systems for actual events over the short term of hours and days. However, humans
will still be caught off-guard.
Emergency management is thus a no-win game. However, someone has to do it. They need
to do the best they can in preplanning:
1. gathering and organizing data likely to be pertinent;
2. developing action plans that can be implemented at the national, regional, and local
level;
3. organizing people into teams to respond nationally, regionally, and locally, trained to
identify events, and to respond with all needed systems (rescue, medical, food,
transportation, control, etc.).

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Two mechanisms were proposed, one to possibly better predict earthquake damage
magnitude (prediction markets), the other to prepare response team performance (recognition
primed decision making). In conjunction with broader use of information system technology,
it may be possible to improve preparedness and response.

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