# 4.3.3 Physical risk models

This chapter introduces the two main types of models used to estimate asset-level physical risks. The first model depends on damage functions to calculate the expected damage factor to an asset from floods, tropical storms, and extratropical storms. The second model calculates disruption to operations as an indicator of physical risk from heat and cold. In cases of thermal stress, operation risks are higher than damage risks and, hence, modelled differently than physical risks arising from floods and storms.

The following chapter explains the concept of damage functions and damage factors before describing the various mathematical models utilised for floods and storms, and the methodology behind calculating thermal stress disruption. Afterwards, we explain the geospatial processes that extract hazard values from hazard maps and – combined with the damage functions – transform them into various damage factors for each asset.