Glossary
Probable Maximum Loss (PML)
Probable Maximum Loss (PML)
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CONTENTS
Probable Maximum Loss (PML) is the largest loss an asset or portfolio is likely to suffer from a single severe event under adverse-but-realistic conditions.
Example in context
You're an insurance advisor setting cover for a manufacturing site. The flood PML — say €18M against a €50M asset — tells you the worst realistic single-event hit you need to protect against, and where to set the limit.
Why it matters
PML sizes worst-case single-event exposure for setting limits, reserves, and cover — the everyday AAL view alone would leave you under-protected. EarthScan derives event-level losses from return periods and damage curves.
Size your worst-case exposure
FAQ
How does PML differ from AAL?
PML is the worst realistic single-event loss; AAL is the average expected loss across a typical year.
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