Event-Based Seismic Risk Assessment for Indonesia’s Post-Disaster Fund to Stimulate House Damage Recovery

Indonesia, situated at the convergence of four major tectonic plates, has historically been prone to significant seismic activity. In response, the country has adopted Disaster Risk Financing and Insurance (DRFI) as a strategic approach to managing funds, particularly for post-disaster recovery, which poses significant budgeting challenges. This study conducted a detailed seismic risk assessment specifically aiming to enhance the management of funds designated for housing damage recovery after earthquakes. Employing downscaling exposure models and event-based seismic risk assessments, this study estimates the value of earthquake-affected residential properties in Indonesia at the sub-district level to be USD 380.6 billion as of 2022. Subsequent risk analysis employing the event-based seismic risk model produced a hazard map, an exceedance probability curve, and an average annual loss map, indicating an average annual loss ratio of 0.1035% relative to the total exposure. The accuracy of the model was validated using historical event loss data from the 2022 Cianjur earthquake, achieving a mean absolute percentage error of 3.0% at the regency level. This precision level confirms its utility in estimating funds necessary for housing recovery initiatives at this administrative level. The findings support the model’s reliability in assessing the risks associated with funding for earthquake-induced damage up to the regency level and suggest its potential to refine DRFI policies. This model is expected to enhance the effectiveness and inclusiveness of disaster finance strategies in Indonesia.