The first step in understanding earthquake risk is to dissect the earthquake risk or loss process into its constituent steps. Earthquake risk begins with the occurrence of the earthquake, which results in a number of earthquake hazards.

The most fundamental of these hazards is faulting, that is, the surface expression of the differential movement of blocks of the Earth’s crust. Faulting can be a simple “mole-track” lateral movement, or a major vertical scarp, or may not even be visible.

In most cases, faulting is typically a long narrow feature, and therefore affects a relatively small fraction of the total affected structures and persons. Affecting a much greater number of structures and persons is shaking, which is typically the primary hazard due to earthquakes.

Depending on the earthquake, liquefaction, other forms of ground failure, tsunamis, or other types of hazards may be significant agents of damage. For various reasons, many buildings, portions of the infrastructure, and other structures cannot fully resist these hazards, and sustain some degree of damage.

Primary damage can vary from minor cracking to total collapse. Some building types are more vulnerable than others, but even when a building sustains no structural damage, the contents of the building may be severely damaged.

For certain occupancies, such as hospitals or emergency services dispatch centers, this damage to contents (laboratories, specialized machinery, communication equipment, etc.) can be very important. Additionally, these various kinds of primary damage can lead to other secondary forms of hazard and damage, such as releases of hazardous materials, major fires, or flooding.

Damage results in loss.
Primary loss can take many forms — life loss or injury is the primary concern, but financial loss and loss of function are also of major concern. The likelihood of sustaining a loss is termed risk . Primary losses lead to secondary forms of loss, such as loss of revenues resulting from business interruption and loss of market share and/or reputation.

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