The structural challenges presented by distant risks

THE LOWLY PINE BEETLE now holds the record for the largest infestation in North American history. They have attacked pine forests across 12 western states, and in British Columbia are now laying siege to an area three times the size of Maryland.

Conditions for this infestation were, in a sense, created long ago. Clear-cutting and wild- fire suppression helped create forests of same-age trees, the pine beetle’s favorite (infestations may also be helped by unusually mild winters).

The group looks at “JARing Actions,” an acronym for 'Jeopardize Assets that are Remote’ in time, distance, or probability. Another factor is that the distributions of the catastrophes that result from these actions often have “hefty tails” — more deaths and more damage than are predicted. Aside from the pine beetle infestation, the group is using this methodological lens to look at earthquakes, floods, and fires.

Team members:
Richard Zeckhauser
Alan Berger
Carolyn Kousky