Snow on an apple hanging from a tree.

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 proportional to a community’s risk; thus, a higher Expected Annual Loss score results in a higher Risk Index score.

A map of the United states colored by composite Expected Annual Loss ratings. For full results, see the National Risk Index Map webpage.

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.

A graphic depicting the equation for calculating Expected Annual Loss. The equation is exposure times annualized frequency times historic loss ratio equals Expected Annual Loss. Exposure is a natural hazard consequence factor that measures the building value, population, and agriculture value potentially exposed to a natural hazard occurrence. Annualized frequency is a natural hazard incidence factor that measures the expected frequency or probability of a hazard occurrence per year. Historic loss ratio is a natural hazard consequence factor that measures the percentage of the exposed consequence type value (building, population, or agriculture) expected to be lost due to a hazard occurrence. Expected Annual Loss represents the average economic loss in dollars resulting from natural hazards each year.

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 $7.6 million of economic loss. This was determined by inflating the 2015 VSL of $6.9 million to 2020 dollars using the Bureau of Labor Statistics’ Consumer Price Index Inflation Calculator.

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 min-max normalized for every community.

To generate the composite Expected Annual Loss score for each community, the unnormalized total Expected Annual Loss values for each hazard are also summed and then min-max normalized.

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

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