Resilient Risk Management
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The document discusses resilient risk management in the context of catastrophe modeling, emphasizing the need for a new approach due to deep uncertainty and the inadequacies of current models. It advocates for adaptive strategies that incorporate multiple perspectives and data to improve understanding of risk, and stresses the importance of transparency and flexibility in modeling practices. The document also suggests leveraging client data and alternative models to gain competitive advantages in the industry.
Resilient Risk Management
- 1. RESILIENT RISK MANAGEMENT Claire Souch, PhD VP, Model Solutions ©2013 Risk Management Solutions, Inc.
- 2. MODELING CHALLENGES • Too many surprises OPERATIONS UNDERWRITING PORTFOLIO • Can’t control key MODELS MANAGEMENT assumptions • Lack of insight into drivers of risk • Doesn’t facilitate understanding by all ©2013 Risk Management Solutions, Inc.
- 3. MODELS IMPROVE OVER TIME, BUT UNCERTAINTY REMAINS 250 yr. loss uncertainty ©2013 Risk Management Solutions, Inc.
- 4. HOW RESILIENT Will I fall off a ARE YOU? cliff? Maximize return - optimize to top of a pinnacle? Minimise regret - search out stable plateaus? ©2013 Risk Management Solutions, Inc.
- 5. In the RMS development of catastrophe THE MARKET models, which explicitly acknowledges that IS CALLING FOR A NEW CATASTROPHE RISK IS PARADIGM CHARACTERIZED BY DEEP UNCERTAINTY LEARNING IS ON-GOING ONE SIZE DOESNT ALWAYS FIT ALL ©2013 Risk Management Solutions, Inc.
- 6. In the Client understanding and use of cat THE MARKET models IS CALLING FOR A NEW PARADIGM UNDERSTANDING IMPLIED BETS ADAPT QUICKLY TO NEW INFORMATION OWNING A VIEW OF RISK ©2013 Risk Management Solutions, Inc.
- 7. THE PATHS TO RESILIENT RISK MANAGEMENT DIAGNOSTIC UNDER- VIEWS AND STANDING SENSITIVITY IMPLIED BETS TESTS POST EVENT, ADAPTING TO INTERIM ONGOING VIEWS, OWN LEARNING EXPERIENCE ADJUSTMENTS OWNING THE ALTERNATIVES VIEW OF RISK OPEN PLATFORM ©2013 Risk Management Solutions, Inc.
- 8. RMS – PROVIDING INDUSTRY REFERENCE VIEW Build world-class (and increasingly transparent) models with an official RMS reference point ©2013 Risk Management Solutions, Inc.
- 9. PROVISION RMS REFERENCE MULTIPLE VIEWS… IN A SINGLE, FAST, AUDITABLE DIAGNOSTIC “There is no single PLATFORM ADJUSTED correct approach” ABI Industry Good Practice for Catastrophe Modeling, Dec 2011 ALTERNATIVE YOUR OWN ©2013 Risk Management Solutions, Inc.
- 10. OPEN EXPOSURE MODELING = ACCESS TO MODEL COMPONENTS HAZARD PLA CONDUCT SENSITIVITY TESTS LEVERAGE YOUR OWN CLAIMS DATA AND RESEARCH LOSS RATES GAIN COMPETITIVE ADVANTAGE MAINTAIN AN AUDIT TRAIL VULNERABILITY ©2013 Risk Management Solutions, Inc.
- 11. UTILISE MULTIPLE MODELS COMPARE MODELS SIDE BY SIDE FILL GAPS IN THE RMS MODEL SUITE RMS MODELS YOUR OWN IMPORT RESULTS MODELS FROM OTHER MODELS ©2013 Risk Management Solutions, Inc.
- 12. BLEND MODEL RESULTS CHOSE ONE MODEL OR BLEND MODEL RESULTS RMS(one) ENABLES YOUR BEST PRACTICE BLEND RESULTS ©2013 Risk Management Solutions, Inc.
- 13. “Risk management, we believe, should be about lessening the impact of events we don’t understand” - Naseem Taleb, Harvard Business Review ©2013 Risk Management Solutions, Inc.