There is further research needed on full economic impacts of disaster risks, including distributional and spill-over effects of natural hazards. This need has been echoed by the scientific community. While many existing disaster risk models focus on direct (material) damage on tangible assets such as residential properties and infrastructure, few models address the so-called ’indirect economic consequences’, including production losses in areas affected through supply chain networks, or the cost of economic recovery after a flood. Research within the ENHANCE project shows that conventional risk modelling may severely underestimate disaster risk. One of the most important reasons for this underestimation is the degree of dependency of economic systems on critical infrastructure. One of the current focus points for policy makers is the vulnerability of this critical infrastructure to natural disasters. Infrastructure is the backbone of economic growth and social cohesion. The disruption of (critical) infrastructure, as a result of natural hazards, may be estimated through productivity losses and increased cost of production, which are set in motion by the substitution of more efficient and competitive supplies with lesser efficient supplies. For impact assessments, it is essential to outline the spatial extent of regions physically unaffected by the extreme event(s) that are disrupted as a result of damaged infrastructure.
Besides the impacts of large-scale disaster events, such as floods and earthquakes, there is an increased interest in the economic effects of extreme weather events, such as extreme rainfall, wind and hail. In north-western Europe, for instance, wind and hail storms are the most costly events for the insurance sector and have a much larger probability of occurrence in comparison to large- scale river or coastal flooding. Moreover, in relation to the failure of critical infrastructures, the modelling frameworks presented in the ENHANCE project serve as a good starting point to develop methods to assess the economic consequences of extreme weather events.