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Risk Models
RMS scientists and engineers specialize in developing probabilistic
(stochastic) models of catastrophes. These risk models and
databases are accessible through the full range of RMS software products
and consulting services.
RMS catastrophe models are built upon detailed databases describing
highly localized variations in hazard characteristics, as well as
databases capturing property and casualty inventory, building stock, and insurance
exposures. They are continually maintained and updated to reflect the
latest in scientific research and data availability.
Global Coverage
RMS models offer coverage for over 50 countries and territories
worldwide, representing more than 90% of global property insurance
premium. RMS has developed models for key catastrophe perils that drive
earnings volatility capital requirements across the insurance and
reinsurance industry. These include:
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earthquake |
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fire following earthquake |
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tropical cyclone (hurricanes, typhoons, and
cyclones) |
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extra-tropical cyclone (windstorm) |
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storm-surge |
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river flooding |
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tornadoes |
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hailstorms |
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terrorism |
Validation Standards
While RMS models leverage public domain research, the development effort
often involves critical RMS-initiated research and development. All RMS
models are extensively validated against a defined set of standards,
often in collaboration with external reviewers and consultants. RMS
models:
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Reflect the state-of-the-art understanding of
physical damages |
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Are able to reconstruct specific events at all
levels of geographic and demographic resolution |
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Are calibrated against actual loss data wherever
possible |
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Exhibit stable behavior when "stress-tested"
against real-world portfolios and risk management applications |
No Black Boxes
RMS is committed to open communication and client education regarding
its models. While the proprietary aspects of RMS models are not
disclosed in public forums, RMS provides clients and other key
constituents with information on model sensitivities to key variables
and assumptions, demonstrating the depth of its calibration and
validation efforts. Because of this approach, RMS clients and other
market participants have confidence in using RMS models for critical
risk management decisions. |
