Managing Physical Climate Risk - Leveraging Innovations in Catastrophe Risk Modelling

Maryam Golnaraghi, Paul Nunn, Robert Muir-Wood, David N. Bresch et al.

Over the last 30 years catastrophe loss modelling (Cat models)—arguably the first InsurTech offering in the form of innovative tools— has revolutionised the (re)insurance industry’s capacity to assess, price and manage risks of extreme events for property/catastrophe business and has provided a shared common language for risk transfer applications.

Today, the value of Cat models has also been recognised across many other sectors and users, leading to various derivatives of these models that are supported by development professionals, the financial sector and national to local governments, in making risk-based decisions. Cat models, conditioned on rapidly advancing Earth observations and climate change models, offer the opportunity for (re)insurers and other sectors to assess physical risk of climate change with a forward-looking approach building on the Financial Stability Board’s Task Force on Climate-related Disclosure (FSB-TCFD) recommendations.

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