DISASTER RISK MANAGEMENT

Chapter 8: Risk Analysis Techniques

Complete Study Notes + All Past Year Q&A + Probable Questions
TU IOE | BCE IV/II | CE 78506 | 5 Hours

📌 Chapter 8 — At a Glance

Marks Weight: 8–16 marks per exam | Asked in EVERY paper. Highest mark-carrying
question in many exams.

Syllabus Hours: 5 hours

Core Topics: Risk Analysis → Types (Qualitative vs Quantitative) → Risk Matrix → Risk
Curve → Monte Carlo Method → SWOT Analysis → Loss Types → Objectives of Risk
Analysis

Key Tip: The Risk Matrix diagram + Monte Carlo explanation are the highest-scoring parts.
Always draw the matrix table and write the Monte Carlo steps clearly!

8.1 RISK — FOUNDATION CONCEPTS

What is Risk?
Risk is the probability or likelihood that a hazard will cause harm or loss to people, property,
livelihoods, or the environment within a specific period of time. Risk is NOT the same as hazard — a
hazard is the threat, risk is the chance that the hazard will actually cause damage.

The Risk Equation — Must Write in Exam!

Risk = Hazard × Vulnerability / Coping Capacity

OR simply: Risk = Hazard × Vulnerability

Hazard (H): The potential threatening event (earthquake, flood, landslide)

Vulnerability (V): The degree to which people/structures are susceptible to damage from that
hazard

Coping Capacity (C): The ability of individuals/communities to resist and recover from the
disaster

Example: A community in an earthquake zone (high H) with weak mud houses (high V) and no
earthquake preparedness (low C) = VERY HIGH RISK

Types of Risk
• Acceptable Risk: The level of risk that is tolerated by society and policymakers based on current
knowledge and economic/social considerations. Risk cannot be reduced to zero — some level must
be accepted.
• Residual Risk: The risk that remains even after all possible mitigation and prevention measures
have been taken. No matter how well you prepare, some risk always remains.
• Perceived Risk: The subjective assessment of risk by individuals or communities based on their
knowledge, experience, and beliefs. May differ significantly from actual/calculated risk.
 • Systemic Risk: Risk that affects the entire system (economy, infrastructure) rather than just
individual components.

What is Risk Assessment?

Risk Assessment is the process of identifying, analyzing, and evaluating risks to determine their
likelihood and potential consequences. It is the foundation of all disaster risk management decisions —
you cannot manage what you haven't measured.

• Risk Identification: What hazards exist? What elements are exposed?

• Risk Analysis: How likely is the hazard? How severe will the consequences be?
• Risk Evaluation: Is the risk acceptable? What priority should be given to risk reduction?

8.2 RISK ANALYSIS — DEFINITION & OBJECTIVES

Definition of Risk Analysis

Risk Analysis is a systematic process of understanding the nature of risk by determining its
probability and consequences using qualitative or quantitative methods. It helps decision-makers
understand how much risk exists, where it comes from, and how to prioritize risk reduction actions.

Objectives of Risk Analysis

1. Identify and understand hazards: Understand the nature, frequency, and magnitude of hazards
that could cause disasters
2. Assess vulnerability: Determine which elements (people, buildings, infrastructure) are most
vulnerable to identified hazards
3. Estimate probability: Calculate or estimate the likelihood of a hazard occurring within a given time
period
4. Estimate consequences: Determine the potential impact in terms of human losses, economic
losses, and damage to infrastructure
5. Prioritize risks: Rank risks from highest to lowest priority so resources can be allocated most
effectively
6. Inform decision-making: Provide evidence-based information for policymakers, planners, and
community leaders to make risk reduction decisions
7. Support risk communication: Help communicate risks clearly to the public, government, and
international partners
8. Cost-benefit analysis: Compare the cost of risk reduction measures against the cost of potential
disaster losses

Types of Losses in Risk Analysis

Risk analysis accounts for all possible types of losses:

TYPE OF LOSS DESCRIPTION + EXAMPLES

Human Losses Deaths, injuries, missing persons, psychological trauma,

displacement of people from their homes
Physical / Direct Damage to buildings, infrastructure (roads, bridges), machinery,
Losses equipment, crops, livestock
Economic / Indirect Business interruption, loss of income/livelihoods, reduced
Losses agricultural production, trade disruption
 Social Losses Disruption of education, health services, social networks, cultural
heritage, community cohesion
Environmental Losses Damage to ecosystems, forests, rivers, soil erosion, water
contamination, loss of biodiversity
Institutional Losses Damage to government offices, loss of records and data,
disruption of governance and public services

8.3 QUALITATIVE vs QUANTITATIVE RISK ASSESSMENT

Risk analysis methods are broadly divided into two categories: Qualitative (descriptive, judgment-
based) and Quantitative (numerical, data-based). Both are important and used together in practice.

# QUALITATIVE RISK ASSESSMENT QUANTITATIVE RISK ASSESSMENT

1 Definition: Expresses risk in numerical terms using

Describes risk using words and categories statistical data, probability calculations,
(High/Medium/Low) based on expert and mathematical models
judgment, experience, and community
knowledge

2 Data Required: Large amounts of statistical data, historical

Minimal data needed. Uses expert opinion, records, sensor data, and technical
historical records, community knowledge expertise needed

3 Output: Numbers: e.g., "30% probability of flooding

Descriptive categories: e.g., "High Risk in 10 years", "Expected annual loss = NPR
Zone", "Moderate Vulnerability", "Low 50 million"
Hazard"

4 Methods Used: Monte Carlo Simulation, Fault Tree

SWOT Analysis, Risk Matrix, Expert Analysis, Event Tree Analysis, RADIUS
consultation, Historical analogy, tool, CAPRA tool
Community-based assessment

5 Accuracy: More precise — based on data and

Less precise — subjective and dependent mathematical models
on expert judgment

6 Cost & Time: Expensive and time-consuming —

Quick and inexpensive — can be done in requires technical experts and specialized
field with limited resources software

7 Best Used When: Detailed engineering studies, insurance

Initial assessment, limited data, calculations, infrastructure design, policy
community-level analysis, rapid screening decisions

8 Nepal Context: RADIUS tool for urban seismic risk,

Community Disaster Risk Assessment CAPRA for probabilistic risk assessment
(CDRA), village-level hazard mapping

📝 EXAM QUESTION | 2074, 2079, 2078 — 6–15 marks

What is risk analysis? Describe the qualitative and quantitative risk analysis method.
(2074) / Differentiate the quantitative and qualitative risk assessment tools. (2079)
 Introduction (2 lines):
Risk analysis is the systematic process of understanding the nature of risk by determining
its probability and consequences. It can be done using qualitative (descriptive) or
quantitative (numerical) methods.

Qualitative Risk Analysis (write 4–5 points):

• Uses descriptive categories: High / Medium / Low risk.

• Based on expert judgment, historical records, and community knowledge.

• Methods: SWOT Analysis, Risk Matrix (qualitative version), Expert consultation.

• Quick, inexpensive, good for initial screening and community-level work.

• Example in Nepal: Village-level disaster risk assessment by local DRM committees.

Quantitative Risk Analysis (write 4–5 points):
• Expresses risk as a number: probability (%), expected annual loss (NPR), return period
(years).

• Requires large datasets, historical records, and technical modeling tools.

• Methods: Monte Carlo Simulation, RADIUS, CAPRA, Fault Tree Analysis.

• More accurate but expensive and time-consuming.

• Example in Nepal: RADIUS tool used for Kathmandu urban seismic risk assessment.
Conclusion (1 line):
Both methods complement each other. Qualitative for initial screening; quantitative for
detailed analysis. Best practice uses both together.

8.4 RISK MATRIX

What is a Risk Matrix?

A Risk Matrix is a simple visual tool used in qualitative risk analysis to evaluate and rank risks based
on two parameters: (1) Likelihood / Probability of the hazard occurring, and (2) Consequence /
Impact / Severity if the hazard occurs. It is also called a Likelihood-Consequence Matrix or
Probability-Impact Matrix.

Risk Matrix Formula

Risk Level = Likelihood (Probability) × Consequence (Impact)

The higher the likelihood AND the higher the consequence, the higher the overall risk level.

The 5×5 Risk Matrix — Draw This in Exam!

Scale used: Both Likelihood and Consequence are rated on a 1–5 scale:

Score Likelihood Meaning

1 Rare May happen once

in 100+ years
 2 Unlikely Once in 25–100
years

3 Possible Once in 10–25

years

4 Likely Once in 2–10

years

5 Almost Could happen

Certain every year or
more

Score Consequence Meaning

1 Insignificant No injuries, minor

property damage

2 Minor Some injuries,

limited property
damage

3 Moderate Medical treatment,

significant
property loss

4 Major Deaths, serious

injuries, large
economic loss

5 Catastrophic Multiple deaths,

massive
destruction, long-
term impact

The 5×5 Risk Matrix Grid:

Rows = Consequence (1 top to 5 bottom) | Columns = Likelihood (1 left to 5 right) | Cell value = L × C

C↓ L L=1 L=2 L=3 L=4 L=5

→

C=5 5 MEDIUM 10 HIGH 15 HIGH 20 EXTREME 25 EXTREME

C=4 4 LOW 8 MEDIUM 12 HIGH 16 HIGH 20 EXTREME

C=3 3 LOW 6 MEDIUM 9 MEDIUM 12 HIGH 15 HIGH

C=2 2 LOW 4 LOW 6 MEDIUM 8 MEDIUM 10 HIGH

C=1 1 LOW 2 LOW 3 LOW 4 LOW 5 MEDIUM

🟢 LOW (1–4) 🟡 MEDIUM (5–9) 🟠 HIGH (10–16) 🔴 EXTREME (17–25)

How to Use the Risk Matrix — Steps

9. List all hazards: e.g., Earthquake, Flood, Landslide, Fire, Drought for a given area
10. Rate Likelihood (1–5): For each hazard, assign a Likelihood score based on historical
frequency
 11. Rate Consequence (1–5): For each hazard, assign a Consequence score based on potential
impact
12. Calculate Risk Score: Risk Score = Likelihood × Consequence
13. Plot on Matrix: Find the cell where the row (Consequence) and column (Likelihood) meet
14. Interpret: Read the risk level (Low/Medium/High/Extreme) from the colour-coded matrix
15. Prioritize: Extreme and High risks get immediate attention and resources. Low risks are
monitored.

Risk Matrix Example — Nepal Context

Hazard Likelihood Consequence Risk Score Risk Level
(1–5) (1–5)

Earthquake 4 5 20 EXTREME 🔴
(Kathmandu)

Monsoon Flooding 5 4 20 EXTREME 🔴

(Terai)

Landslide (Hills) 4 4 16 HIGH 🟠

GLOF (High 2 5 10 HIGH 🟠

Himalaya)

Drought (Terai) 3 3 9 MEDIUM 🟡

Fire (Urban areas) 3 2 6 MEDIUM 🟡

Hailstorm 3 1 3 LOW 🟢

📝 EXAM QUESTION | 2082, 2081, 2073 — 4–16 marks

Explain the Risk Matrix. Prepare a Risk Matrix for Nepal. / Write short notes on:
Preparation of Risk Matrix.
Definition (2 lines):
Risk Matrix is a qualitative risk analysis tool that plots the Likelihood and Consequence of
each hazard on a grid to determine the overall risk level (Low/Medium/High/Extreme).

In Exam — Write these 4 parts:

Step 1: Define the Likelihood scale (1=Rare to 5=Almost Certain) — show as a small table
Step 2: Define the Consequence scale (1=Insignificant to 5=Catastrophic) — show as a
small table
Step 3: Draw the 5×5 Risk Matrix grid — label rows as Consequence, columns as
Likelihood. Fill cells with L×C values and colour-code (Green/Yellow/Orange/Red)
Step 4: Give a worked Nepal example — Earthquake gets L=4, C=5, Score=20 =
EXTREME risk
Conclusion: Risk Matrix helps prioritize which hazards need urgent mitigation and which can
be monitored. It is widely used because it is simple, visual, and can be done without large
datasets.

8.5 RISK CURVE (F-N CURVE)

What is a Risk Curve?
A Risk Curve (also called F-N Curve — Frequency-Number Curve) is a graph that shows the
relationship between the frequency (how often) of a disaster event and the number of casualties or
magnitude of losses associated with that event.

Risk Curve — Axes and Meaning

X-Axis (Horizontal): Magnitude of consequence — Number of deaths (N) or Amount of loss

(in NPR or USD)

Y-Axis (Vertical): Frequency (F) — How often an event of that magnitude occurs per year
(Annual Frequency) OR Exceedance Probability

Reading the Curve: Points on the upper-left = frequent but small events. Points on lower-
right = rare but catastrophic events.

Example: Small floods (10 deaths) happen every year (F=1.0). Major floods (500 deaths) happen
once in 50 years (F=0.02). Mega earthquake (10,000 deaths) happens once in 500 years
(F=0.002).

Tolerable vs Intolerable Risk Zone

The Risk Curve is divided into zones using two boundary lines:
• Upper Limit Line (Intolerable Zone): Risk above this line is INTOLERABLE — action MUST be
taken regardless of cost. Society cannot accept this level of risk.
• Lower Limit Line (Acceptable Zone): Risk below this line is ACCEPTABLE — can be monitored
but no urgent action needed.
• ALARP Zone (As Low As Reasonably Practicable): The zone BETWEEN the two lines. Risk here
should be reduced as much as reasonably possible, balancing cost vs benefit.

How to Draw the Risk Curve — Exam Instructions

Step 1: Draw X-axis = Number of deaths/losses (log scale). Draw Y-axis = Annual frequency
(log scale, going downward).

Step 2: Plot data points: each point = (N, F) where N = deaths and F = frequency of events
with N or more deaths.

Step 3: Connect the points to form a downward-sloping curve (more deaths = less frequent).

Step 4: Draw two horizontal/curved lines: Upper = Intolerable Zone boundary. Lower =
Acceptable Zone boundary.

Step 5: Label the three zones: INTOLERABLE (above upper), ALARP (between lines),
ACCEPTABLE (below lower).

Key Rule: The curve slopes DOWNWARD from left to right — catastrophic events are RARER
than small events.

Return Period — Related Concept

Return Period (Recurrence Interval): The average time interval between occurrences of a hazard
event of a given magnitude.

Return Period Formula

Return Period (T) = 1 / Annual Exceedance Probability (p)

 Example: A flood with 2% annual probability has a Return Period = 1/0.02 = 50 years → called a
"50-year flood". A 1% annual probability event = 100-year return period.

Note: "100-year flood" does NOT mean it happens exactly once in 100 years — it means
there is a 1% chance it happens in ANY given year.

8.6 MONTE CARLO METHOD — QUANTITATIVE RISK ANALYSIS

What is the Monte Carlo Method?

The Monte Carlo Method is a computational/statistical technique used to estimate risk
quantitatively by running a very large number of random simulations (thousands or millions of
iterations) to model the probability distribution of possible outcomes when variables are uncertain.

It is named after the Monte Carlo Casino in Monaco because it uses randomness (like rolling dice) to
simulate complex real-world events. It is widely used in engineering, finance, insurance, and disaster
risk assessment to calculate expected annual losses.

Simple Analogy — Monte Carlo in Plain Language

Imagine you want to know: "What is the chance of a major earthquake hitting Kathmandu in
the next 50 years?" You can't predict the future — but you CAN simulate it thousands of times
using known probabilities and random number generation. Monte Carlo runs 10,000 simulated
"50-year futures". In 8,500 of them, no major EQ happens. In 1,500, it does. Answer: 15%
probability. That's Monte Carlo in simple terms.

Monte Carlo Method — Step-by-Step Process

STEP ACTION

Step 1 Define Identify all input variables (hazard probability, building vulnerability, exposure,
the Model etc.) and how they interact. Define what output you want (e.g., expected
annual loss, probability of collapse).
Step 2 Define For each uncertain variable, define its probability distribution: • Hazard
Probability intensity → lognormal or Poisson distribution • Building fragility → fragility
Distributions curves • Economic loss → loss function curve
Step 3 Use a random number generator to produce thousands of random values for
Generate each input variable, following their defined distributions. Each set of random
Random values = ONE simulation scenario.
Samples

Step 4 Run For each scenario, calculate the output (e.g., number of deaths, economic
Simulations loss) using the defined model. Run 10,000–100,000 such scenarios. Each run
takes milliseconds on a computer.
Step 5 Collect all output values from all simulations. Plot as a frequency histogram or
Aggregate probability distribution curve.
Results

Step 6 Calculate: • Mean (expected) loss • Probability of exceeding a certain loss

Statistical threshold • Confidence intervals (90th percentile, 99th percentile loss) •
Analysis Return period losses
Step 7 Present results as: "There is a 10% probability of earthquake losses
Interpret and exceeding NPR 50 billion in Kathmandu in the next 50 years." Use results to
 Report inform policy and risk reduction investments.

Applications of Monte Carlo in Disaster Risk

• Seismic Risk Assessment: Calculate expected annual earthquake losses for a city using
thousands of simulated earthquake scenarios with varying magnitude, location, and depth
• Flood Risk: Estimate probability of flood heights exceeding a given level, accounting for rainfall
variability, river discharge uncertainty, and dam failure probability
• Insurance Premium Calculation: Insurance companies use Monte Carlo to calculate how much to
charge for disaster insurance based on simulated loss scenarios
• Building Fragility: Calculate the probability that a specific building type will collapse given a certain
earthquake intensity
• CAPRA Tool: CAPRA (probabilistic risk assessment platform used in Nepal) uses Monte Carlo
simulations at its core

📝 EXAM QUESTION | 2080, 2073 — 15–16 marks

Explain Risk Analysis Technique in terms of Risk Matrix and Risk Curve. How do you
calculate the quantitative level of risk using the Monte Carlo Method?
This is the HIGHEST-MARK question in Chapter 8. Structure your answer in 3 main
parts:

PART A — Risk Matrix (5 marks):

Write the definition + the 5×5 Matrix with Likelihood and Consequence scales + the filled
matrix table + Nepal example (earthquake = Extreme). Use the full Risk Matrix content from
Section 8.4.

PART B — Risk Curve (4 marks):

Write the definition (F-N curve) + explain X-axis (N = deaths) and Y-axis (F = frequency) +
describe the three zones (Intolerable / ALARP / Acceptable) + explain the downward slope
meaning + mention Return Period formula.

PART C — Monte Carlo Method (6 marks):

Write the definition (computational technique using random simulations) + the 7-step
process table (Define Model → Distributions → Random Samples → Simulations →
Aggregate → Statistical Analysis → Interpret) + one application example (seismic risk
Kathmandu).

8.7 SWOT ANALYSIS AS A RISK ASSESSMENT TECHNIQUE

What is SWOT Analysis?

SWOT Analysis stands for Strengths, Weaknesses, Opportunities, Threats. In the context of DRM, it
is used as a qualitative risk assessment technique to evaluate the internal capacity and external
risks of a community, organization, or system in relation to disaster risk.

SWOT is a simple, participatory tool — it can be done in a community meeting without technical
expertise. It helps communities understand their own strengths they can build on, weaknesses to
address, opportunities to exploit, and threats to prepare for.

🟢 STRENGTHS (Internal, Positive) 🔴 WEAKNESSES (Internal, Negative)

 What does this community/org DO WELL? What are the WEAK POINTS? What areas
What resources/advantages do they have? need improvement?
• Strong community social networks and • Old, non-earthquake-resistant buildings
solidarity (mud/stone)
• Local knowledge of hazard patterns • No early warning system in place
(seasonal floods) • Limited financial resources for risk
• Existing community disaster committees reduction
(CDMCs) • Low disaster literacy and awareness
• Nepal Army and Nepal Police stationed among residents
nearby • Poor road access — blocked during
• Local volunteers trained in first aid and monsoon
SAR • Weak local government capacity for
• Strong traditional coping mechanisms DRM
(community barns)

🔵 OPPORTUNITIES (External, Positive) ⚫ THREATS (External, Negative)

What EXTERNAL FACTORS can help? What EXTERNAL FACTORS create risk?
What opportunities can be used? What threats exist beyond our control?
• Government DRM programs (DRRAP, • Located on active seismic fault zone
NPDM) • Climate change increasing frequency of
• International NGO and UN support extreme events
available • Population growth in high-risk areas
• SFDRR (Sendai Framework) funding • Deforestation increasing landslide risk
opportunities • Rapid urbanization without proper
• Mobile technology for early warning planning
dissemination • Global economic downturn reducing
• New building codes and reconstruction DRM funding
grants
• Growing awareness about climate
change adaptation

SWOT Analysis — How it Functions as Risk Assessment

• Strengths → Coping Capacity: Identifying strengths helps understand what resources are
available to cope with disasters and recover.
• Weaknesses → Vulnerability: Weaknesses directly correspond to vulnerability — weak buildings,
low awareness, poor access are all vulnerability factors.
• Threats → Hazards: External threats (fault zones, climate change, deforestation) are essentially the
hazard profile of the area.
• Opportunities → Risk Reduction: Opportunities show what external support is available for risk
reduction — NGOs, government programs, new technology.

📝 EXAM QUESTION | 2081, 2078 — 6 marks

How SWOT analysis can be explained as a risk assessment technique? Write short
notes on SWOT Analysis.
Definition (2 lines):
SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis is a qualitative risk
assessment tool that evaluates internal capacity and external risk factors of a community or
organization in relation to disaster vulnerability.

The 4 Elements (draw the 2×2 table):

S = Strengths (internal + positive): existing resources, capacity, knowledge

W = Weaknesses (internal + negative): vulnerabilities, gaps, limitations
O = Opportunities (external + positive): support available from outside
 T = Threats (external + negative): hazards, climate change, external risks

Link to Risk Assessment:

W maps to Vulnerability | T maps to Hazards | S maps to Coping Capacity | O maps to Risk

Reduction Potential. This makes SWOT a complete but simple risk assessment framework.
Advantages: Simple, participatory, no technical tools needed, good for community-level DRM
planning.

8.8 OTHER RISK ANALYSIS TECHNIQUES

The exam sometimes asks "Write 5 types of risk analysis techniques with brief description." Here are all the
important ones:

TECHNIQUE DESCRIPTION + HOW IT WORKS

Risk Matrix Qualitative tool. Plots Likelihood (1–5) vs Consequence (1–5) on a

(Likelihood- grid. Risk Score = L × C. Outputs: Low/Medium/High/Extreme
Consequence) zones. Simple, visual, widely used for initial screening.
Risk Curve (F-N Curve) Semi-quantitative. Plots Frequency vs Number of deaths/losses on
a log-log graph. Shows Intolerable / ALARP / Acceptable zones.
Used for setting risk tolerance levels in engineering and policy.
Monte Carlo Simulation Quantitative. Uses thousands of random simulations of uncertain
input variables to produce a probability distribution of outcomes.
Calculates Expected Annual Loss, exceedance probabilities. Used
in CAPRA, insurance pricing.
Fault Tree Analysis Quantitative/Qualitative. Works "top-down" — starts from an
(FTA) undesired event (e.g., building collapse) and traces backward
through all possible causes. Uses AND/OR logic gates. Used in
engineering risk assessment.
Event Tree Analysis Quantitative. Works "bottom-up" — starts from an initiating event
(ETA) (e.g., earthquake) and traces forward through all possible
consequences depending on whether safety systems work or fail.
Calculates probability of each outcome scenario.
Failure Mode and Systematic method to identify all possible failure modes of a
Effects Analysis system, their causes, and their effects. Each failure mode is
(FMEA) ranked by Severity × Occurrence × Detection = Risk Priority
Number (RPN). Common in engineering.
SWOT Analysis Qualitative. Evaluates Strengths, Weaknesses, Opportunities,
Threats. Links internal capacity (S, W) with external factors (O, T).
Simple, participatory, good for community-level DRM planning and
organizational capacity assessment.
Delphi Method Expert consultation technique. A panel of experts anonymously
answers questionnaires about risk levels. Results are shared and
process repeated until consensus is reached. Used when data is
scarce and expert judgment is needed.
Historical Analysis Qualitative. Analyzes past disaster records to assess risk.
(Analogical Method) Identifies patterns and trends from historical events. Simple and
accessible — uses existing records without complex modeling.
Limited by quality of historical data.
 Participatory Rural Community-based qualitative method. Community members map
Appraisal (PRA) hazards, vulnerabilities, and resources using visual tools (transect
walks, hazard maps, seasonal calendars). Used for village-level
DRM planning in Nepal.

📝 EXAM QUESTION | 2077 — 8 marks

What do you mean by Risk Analysis Technique? Write down FIVE types of Risk
Analysis Techniques with brief description.
Definition of Risk Analysis Technique (2 marks):
Risk Analysis Techniques are systematic methods used to identify, analyze, and evaluate
risks by determining their probability of occurrence and potential consequences. They help
decision-makers prioritize risks and allocate resources for risk reduction.

Five Types (1.2 marks each — write 3–4 lines per type):

1. Risk Matrix: Qualitative tool. Rates each hazard on Likelihood (1–5) and Consequence
(1–5). Risk Score = L × C. Outputs: Low/Medium/High/Extreme. Nepal example:
Earthquake → L=4, C=5, Score=20 = Extreme.
2. Risk Curve (F-N Curve): Semi-quantitative. Plots Frequency vs Number of deaths on
log-log graph. Shows 3 zones: Intolerable (above upper line), ALARP (between lines),
Acceptable (below lower line).
3. Monte Carlo Simulation: Quantitative. Runs thousands of random simulations using
probability distributions of uncertain variables. Calculates Expected Annual Loss. Used in
CAPRA tool for Nepal risk assessment.
4. SWOT Analysis: Qualitative. Evaluates Strengths, Weaknesses, Opportunities, Threats.
S=Coping Capacity, W=Vulnerability, T=Hazards, O=Opportunities for risk reduction.
Simple, participatory, community-level tool.
5. Fault Tree Analysis: Starts from an undesired event (building collapse) and traces all
possible causes using AND/OR logic gates. Calculates probability of the top-level undesired
event occurring.

8.9 RESIDUAL RISK & ACCEPTABLE RISK

Residual Risk
Residual Risk is the risk that remains after all possible risk reduction measures have been
implemented. It is impossible to reduce disaster risk to zero — even after building embankments,
earthquake-resistant buildings, early warning systems, and evacuation plans, some level of risk always
remains.

Residual Risk — Key Points

Formula: Residual Risk = Total Risk − Risk Reduced by Mitigation Measures

Why it exists: (1) Some hazards cannot be fully prevented (earthquakes), (2) Some
vulnerabilities persist (old buildings not yet retrofitted), (3) Cost of reducing risk to zero is
infinite and impractical

What to do with Residual Risk: Accept it | Monitor it | Transfer it (through insurance) |

Prepare emergency response for it
 Nepal Example: Even after Nepal Building Code (NBC) is enforced, old pre-code buildings still
exist. The risk from these buildings = Residual Risk. It cannot be eliminated until all old buildings
are retrofitted or demolished.

Acceptable Risk
Acceptable Risk is the level of risk that society, communities, or decision-makers are willing to
tolerate given the current economic, social, and technical constraints. It is the threshold below which
no further risk reduction action is required.

• Who decides Acceptable Risk? Government policy makers, international standards (e.g., risk
curves), and community consultation
• Example: Nepal Building Code sets design standards that correspond to a certain return period
(e.g., 475-year return period = 10% probability in 50 years). Structures designed to survive this are
considered to be at "acceptable risk"
• ALARP Principle: Risk should be reduced "As Low As Reasonably Practicable" — meaning keep
reducing until cost of further reduction outweighs the benefit

KEY TERMS QUICK REFERENCE

⭐ KEY TERM DEFINITION

Risk Probability × Consequence — chance that a hazard will

cause loss or damage to exposed elements
Hazard A potentially damaging physical event (earthquake, flood,
landslide, fire)
Vulnerability Degree to which an element (person, building) is susceptible
to damage from a hazard
Coping Capacity Ability of a community to withstand and recover from disaster
impacts
Risk Analysis Systematic process of determining probability and
consequences of risks using qualitative or quantitative
methods
Risk Assessment Complete process of Risk Identification + Risk Analysis +
Risk Evaluation
Risk Matrix Qualitative tool plotting Likelihood (1–5) vs Consequence (1–
5). Risk = L × C. Outputs: Low/Medium/High/Extreme
Risk Curve (F-N) Graph of Frequency vs Number of deaths showing
Intolerable/ALARP/Acceptable risk zones
Monte Carlo Quantitative simulation technique using thousands of random
scenarios to estimate risk probability distribution
SWOT Analysis Qualitative tool: Strengths / Weaknesses / Opportunities /
Threats. Used for community-level risk assessment
Fault Tree Analysis Top-down method tracing causes of an undesired event
using AND/OR logic gates
Event Tree Analysis Bottom-up method tracing consequences of an initiating
event through success/failure branches
 Residual Risk Risk remaining even after all mitigation measures have been
implemented. Cannot be reduced to zero.
Acceptable Risk Risk level that society tolerates given economic/social
constraints. Below this = no further action needed
ALARP As Low As Reasonably Practicable — risk should be reduced
to this level before it becomes acceptable
Return Period 1 / Annual Exceedance Probability. A 100-year event has 1%
annual probability.
Exceedance Probability Probability that a hazard of a given magnitude will be
exceeded in a given time period
Expected Annual Loss Average loss per year calculated over many simulated years
— key output of Monte Carlo / CAPRA
Qualitative Risk Risk described in words/categories (High/Medium/Low).
Based on expert judgment. Quick and low-cost.
Quantitative Risk Risk expressed as a number (probability %, NPR loss).
Based on data and models. More accurate but complex.
CAPRA Comprehensive Approach to Probabilistic Risk Assessment
— software tool using Monte Carlo. Used in Nepal.
RADIUS Risk Assessment Tools for Diagnosis of Urban Areas against
Seismic Disasters — used for city earthquake risk mapping

HIGH-PROBABILITY PROBABLE EXAM QUESTIONS

Based on 12+ years of exam papers (2070–2082). Chapter 8 has been asked in EVERY year, often
as the highest-mark question.

🔥 HIGH-PROBABILITY EXAM QUESTIONS — BASED ON 2070–2082 TREND

Q1. Explain Risk Analysis Technique in terms of Risk Matrix and Risk Curve. How do
you calculate the quantitative level of risk using the Monte Carlo Method? [15–16
marks]
Expected Marks: 15–16 marks | Most asked + highest marks | 2073, 2080, 2081
Hint: This is the MASTER question of Chapter 8. Structure in 3 parts: Part A: Risk Matrix
(definition + L scale + C scale + draw the 5×5 matrix + Nepal example). Part B: Risk Curve
(definition + F-N axes + 3 zones + ALARP + return period). Part C: Monte Carlo (definition + 7
steps + application). Aim for 2.5 pages.

Q2. What is risk analysis? Describe the qualitative and quantitative risk analysis
methods with examples. [6–15 marks]
Expected Marks: 6–15 marks | Every year in different forms | 2070, 2072, 2074, 2077, 2078, 2079
Hint: Definition of risk analysis → Objectives (8 points) → Qualitative: definition, characteristics,
methods (Matrix, SWOT), example → Quantitative: definition, characteristics, methods (Monte
Carlo, RADIUS, CAPRA), example → Comparison table → Conclusion. Use the full comparison
table from Section 8.3.

Q3. Explain Risk Analysis Technique and its types. How is the Risk Matrix prepared?
[8–10 marks]
Expected Marks: 8–10 marks | 2076, 2077
Hint: Introduction (risk analysis definition) → List 5 types briefly (Matrix, Curve, Monte Carlo,
SWOT, FTA) → Full explanation of Risk Matrix: definition + 5×5 grid + Nepal example table + how
to interpret. Draw the matrix — it shows effort and earns marks.

Q4. Write short notes on: (a) Risk Matrix (b) Risk Curve (c) Monte Carlo Method (d)
SWOT Analysis (e) Residual Risk [4 marks each]
Expected Marks: 4 marks each — Short note format | 2078, 2075
Hint: Short notes appear frequently. For each: 1 line definition, 3–4 bullet points of key content, 1
Nepal example. For Risk Matrix: draw the small table. For Monte Carlo: write the 7 steps briefly.
For Residual Risk: write the formula and why it always exists.

Q5. What is Risk Assessment and Risk Analysis? Differentiate between the two.
Describe different types of risk analysis methods. [8 marks]
Expected Marks: 8 marks | 2072, 2079
Hint: Risk Assessment = broader process (identification + analysis + evaluation). Risk Analysis =
just the analysis part. Use a small comparison table. Then write 4–5 types of risk analysis with 2–3
lines each. Connect with Nepal: RADIUS for seismic, CAPRA for probabilistic, SWOT for
community level.

Q6. Explain the Risk equation. What are the types of losses in risk analysis? How do
qualitative and quantitative methods differ? [8 marks]
Expected Marks: 8 marks | combination question | trend emerging
Hint: Risk = Hazard × Vulnerability / Coping Capacity (explain each term). Types of losses:
Human, Physical, Economic, Social, Environmental, Institutional (use the table). Qualitative vs
Quantitative: use the 8-row comparison table from Section 8.3.

Q7. Explain the SWOT Analysis as a risk assessment technique. Give an example from
the Nepal context. [6 marks]
Expected Marks: 6 marks | 2078, 2081 | likely to repeat
Hint: Definition → Draw the 2×2 SWOT table with Nepal-specific examples in each quadrant (old
buildings = Weakness, fault zone = Threat, community committees = Strength, Sendai funding =
Opportunity) → Explain how S=Coping Capacity, W=Vulnerability, T=Hazard, O=Risk Reduction
potential.

Q8. What is Residual Risk and Acceptable Risk? Explain ALARP principle. [4–6 marks]
Expected Marks: 4–6 marks | short note format | 2075, 2078
Hint: Residual Risk: definition + formula + why it always exists + what to do with it
(accept/monitor/insure/prepare). Acceptable Risk: definition + who decides + Nepal Building Code
example. ALARP: As Low As Reasonably Practicable — reduce until cost > benefit. Connect with
Risk Curve zones.

📌 EXAM WRITING TIPS FOR CHAPTER 8

✅ ALWAYS draw the Risk Matrix — a visual 5×5 grid earns 3–4 marks on its own. Colour-
code with labels (Low/Medium/High/Extreme).

✅ Monte Carlo = "Random Simulations" — always mention "thousands of simulated

scenarios", "probability distribution of outcomes", and "Expected Annual Loss". These are the
examiner's keywords.

✅ For the Risk Curve question — draw the graph shape (downward sloping), label the axes
(F on Y, N on X), and show the three zones. The word "ALARP" alone earns marks.

✅ Risk = Hazard × Vulnerability / Coping Capacity — write this equation early in any risk
analysis answer. It shows you understand the concept fundamentally.

✅ Always link to Nepal context: RADIUS tool (Kathmandu seismic risk) | CAPRA tool
(probabilistic loss curves) | 2015 EQ (expected loss vs actual) | NBC return period (475 years)

✅ For 5-types questions: Risk Matrix + Risk Curve + Monte Carlo + SWOT + FTA/ETA. Give
3–4 lines per type. Don't write too much for one and ignore others.

✅ Qualitative vs Quantitative — always know which is which. Risk Matrix = Qualitative

(despite looking numerical). Monte Carlo = Quantitative. SWOT = Qualitative. FTA can be
both.

✅ Return Period formula: T = 1/p — always mention: "A 10% probability event in 50 years =
475-year return period." This is Nepal Building Code's design standard — examiners love this
example.