Value at Induced Risk: Injection‐Induced Seismic Risk From Low‐Probability, High‐Impact Events.

The increasing number of damaging earthquakes, induced by underground injection of fluids, demonstrates the need of a structured methodology for critical thinking about and clear communication of induced seismic risk. Using the Pohang, South Korea, geothermal project and the damaging (US$75M) local magnitude ML 5.35 induced earthquake in 2017, we present a straightforward methodology that summarizes induced seismic risk in a single time‐dependent number, the Value at Induced Risk (VaIR). VaIR quantifies the amount of economic losses that will not be exceeded at a given confidence level. Our method reveals that the Pohang project was exposed to a 2% chance of causing economic losses of US$140M or more (1% of US$3.2B or more). The high risk could have been identified during the sequence of reservoir stimulation, lasting almost 2 years. VaIR opens new ways to assess and communicate risk to all stakeholders for informed risk management decision making. Plain Language Summary: High‐pressure injection at a geothermal reservoir close to the city of Pohang, South Korea, triggered a damaging (US$75M) ML 5.35 earthquake in November 2017. We present a straightforward methodology for seismic risk assessment, communication, and management for underground injection of fluids. Our method, Value at Induced Risk (VaIR), combines preoperation loss scenario modeling and magnitude‐frequency statistics of the evolving induced seismicity catalog to monitor the evolution of induced seismic risk in real time. Retrospectively, we apply VaIR to the Pohang case. Operators, regulators, and nonexpert stakeholders could have been well‐informed about the elevating risk caused by underground injection in real time. Application of VaIR to future underground injection projects will help to exclude unacceptable losses with high confidence. Key Points: Value at Induced Risk (VaIR) is a straightforward method to communicate and manage seismic risk caused by underground injection of fluidsVaIR combines preoperation loss scenario modeling and magnitude statistics of the evolving induced seismicity catalog to monitor riskVaIR helps to exclude unacceptable losses with high confidence and to inform operators, regulators and nonexpert stakeholders at risk [ABSTRACT FROM AUTHOR]