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Government liabilities for disaster risk in industrialized countries: a case study of Australia Hochrainer-Stigler, S, Keating, A, Handmer, J and Ladds, M 2018, 'Government liabilities for disaster risk in industrialized countries: a case study of Australia', Environmental Hazards, vol. 17, no. 5, pp. 418-435. Document type: Journal Article Collection: Journal Articles Title Government liabilities for disaster risk in industrialized countries: a case study of Australia Author(s) Hochrainer-Stigler, S Keating, A Handmer, J Ladds, M Year 2018 Journal name Environmental Hazards Volume number 17 Issue number 5 Start page 418 End page 435 Total pages 18 Publisher Taylor and Francis Abstract This paper explores sovereign risk preferences against direct and indirect natural disasters losses in industrialized countries. Using Australia as a case study, the analysis compares expected disaster losses and government capacity to finance losses. Utilizing a national disaster loss dataset, extreme value theory is applied to estimate an all-hazard annual loss distribution. Unusually but critically, the dataset includes direct as well as indirect losses, allowing for the analysis to consider the oft-ignored issue of indirect losses. Expected annual losses (direct, and direct plus indirect) are overlaid with a risk-layer approach, to distinguish low, medium and extreme loss events. Each risk layer is compared to available fiscal resources for financing losses, grounded in the political reality of Australian disaster financing. When considering direct losses only, we find support for a risk-neutral preference on the part of the Australian government for low and medium loss levels, and a risk-averse preference in regard to extreme losses. When indirect losses are also estimated, we find that even medium loss levels are expected to overwhelm available fiscal resources, thereby violating the available resources assumption underlying arguments for sovereign risk neutrality. Our analysis provides empirical support for the assertion that indirect losses are a major, under-recognised concern for industrialized countries. A risk-averse preference in regard to medium and extreme loss events recommends enhanced investment in both corrective and prospective risk reduction in relation to these risks level, in particular to reduce indirect losses. Subject Environmental Science and Management not elsewhere classified Keyword(s) Australia direct and indirect losses fiscal risk Natural disasters risk-layer DOI - identifier 10.1080/17477891.2018.1426554 Copyright notice © 2018 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group ISSN 1747-7891 Related Links Link Description https://doi.org/10.1080/17477891.2018.1426554 Link to Published Version   Versions Version Filter Type Thu, 23 May 2019, 15:31:16 EST Filtered Full Citation counts:   Cited 0 times in Thomson Reuters Web of Science Article Cited 0 times in Scopus Article Altmetric details: Access Statistics: 26 Abstract Views  -  Detailed Statistics Created: Thu, 23 May 2019, 08:44:00 EST by Catalyst Administrator