ONE-YEAR RISK FOR RANDOM EVENTS

 

Suppose that a random event occurs, on the average, once every 100 years.  The risk (or probability) that this event will occur in any given year is:

      Risk  =  1/(R.I.)  =  1/(100)  =  0.01  (which is 1%)

 

Similarly, we can calculate one-year risks for various recurrence intervals:

RECURRENCE  INTERVAL (R.I.) 1 / (R.I.) ONE-YEAR RISK
50 years 0.02 2%
25 years 0.04 4%
20 years 0.05 5%
10 years 0.10 10%