Average probability of extreme events

Authors

  • Manuel A. Benson


Abstract

During the course of a study of flood insurance and insurance rates, it was found necessary to take into account the risk, over a long period of time, from all floods above the 100-year flood level. The problem was approached by considering first what is the average probability of all floods above the 100-year level. It was found that the average probability of all such floods is equal to 0.005, or the probability of the 200-year flood. In general, it could be shown that the average probability of all floods above the k-year flood is equal to l/2k.

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