Aspects of the theory of financial risk management for natural disasters

We analyze two aspects of the theory of financial risk management for natural disasters such as earthquakes. First, we use the theory of Poisson processes to construct a model of an earthquake. We then use this model to provide an index of the monetary damage from an earthquake with aftershocks. Second, we study the question of business failure, i.e., the likelihood that an insurance provider will become insolvent in the event that earthquake insurance is provided and a major earthquake does in fact occur.