# Expected Annual Loss

Expected Annual Loss (EAL) represents the average economic loss in dollars resulting from natural hazards each year. It is calculated for each hazard type and quantifies loss for relevant consequence types: buildings, people, and agriculture.

As the *natural hazards component* of the National Risk Index, an Expected Annual Loss score and rating represent a community's relative level of expected losses each year when compared to all other communities at the same level. An Expected Annual Loss score is positively associated to a community's risk; thus, a higher Expected Annual Loss score results in a higher Risk Index score.

## Calculating Expected Annual Loss

Expected Annual Loss is calculated using a multiplicative equation that includes exposure, annualized frequency, and historic loss ratio risk factors for 18 natural hazards.

An Expected Annual Loss score is calculated independently for each consequence type—buildings, population, and agriculture—for each community (county and Census tract).

While building and agriculture values are measured in dollars, population is measured in fatalities and injuries. To ensure a common unit of measurement in the Risk Index, the population Expected Annual Loss was monetized into a population equivalence using a value of statistical life (VSL) approach where each fatality or ten injuries is treated as $11.6 million of economic loss.

To generate the relative hazard type Expected Annual Loss scores, the Expected Annual Loss values for each of the three consequence types—building, population equivalence, and agriculture—are summed to represent the total Expected Annual Loss for each hazard type in each community and are then ranked across communities of the same type. Each community's Expected Annual Loss score is then determined based on its rank nationally.

A composite Expected Annual Loss score measures the national rank of total Expected Annual Loss of a community considering all 18 natural hazards, while a hazard type Expected Annual Loss score measures the national rank or percentile of Expected Annual Loss of a community from that hazard type.

## Expected Annual Loss Rate

Expected Annual Loss Rate is defined as the proportion of the total value expected to be lost annually for a given community. Expected Annual Loss Rate is calculated separately for building, population, and agriculture consequence types for all 18 natural hazard types (individually and composite).

Total Expected Annual Loss Rates, which consider all three consequence types, are not calculated. However, Total Expected Annual Loss Rate National Percentiles are provided for all 18 hazard types (individually and composite). These metrics rank communities by a weighted average of Expected Annual Loss Rates across all consequence types.

For comprehensive details about Expected Annual Loss in the Risk Index, see the National Risk Index Technical Documentation.