The 1960 Tele-tsunami: Don’t forget the far field

On May 22, 1960 the most powerful earthquake ever recorded struck approximately 100 miles off the coast of southern Chile. The 9.5 Mw event released the energy equivalent to 2.67 gigatones of TNT (178,000 times the energy yielded from the atomic bomb dropped on Hiroshima) leading to extreme ground shaking in cities such as Valdivia and Puerto Montt, triggering landslides and rockfalls in the Andes as well as resulting in a Pacific basin wide tsunami. In Chile, 58,622 houses were completely destroyed with damages totalling $550 million (~$4 billion today adjusted for inflation).

However, the effects in the far field were also significant. While the majority of the damage and approximately 1,380 fatalities occurred in close proximity to the earthquake, a proportion of the tsunami death toll and damage occurred over 5,000 miles away from the epicentre and reached as far away as Japan and the Philippines.

Such tsunamis with the potential to cause damage and fatalities at locations distant from their source are known as tele-tsunamis or far-field tsunamis and require a large magnitude earthquake (>7.5) on a subduction zone to be triggered. Recent events, such as the 2011 Tohoku and 2010 Maule earthquakes, demonstrated that even if these criteria are met, the effects of any resulting tsunami may not be felt significantly beyond the immediate coastline. As such, it can be easy to forget the risks at potential far field sites. However, the 55th anniversary of the 1960 Chilean earthquake and tsunami provides a useful reminder that megathrust earthquakes can have far reaching consequences.

Across the Pacific, the 1960 tsunami caused 61 deaths and $75 million damage (~$600 million today) in Hawaii, 138 deaths and $50 million damage (~$400 million today) in Japan, and left 32 dead or missing in the Philippines.

Hilo Bay, on the big island of Hawaii, was particularly hard hit with wave heights reaching 35 feet (~11 meters), compared to only 3-17 feet or 1-5 meters elsewhere in Hawaii. Approximately 540 homes and businesses were destroyed or severely damaged, wiping out much of downtown Hilo.

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                          Aftermath of the event in Hilo (USGS)                                               Inundation extent of the 1960 tsunami in Hilo (USGS)

Despite an official warning from the U.S. Coast and Geodetic Survey and the sounding of coastal sirens, 61 people in Hilo died as a result of the tsunami and an additional 282 were badly injured. The majority of these casualties occurred because people did not evacuate, either due to misunderstanding or not taking the warnings seriously. Many remained in the Waiakea peninsula area, which was perceived to be safe due to the minimal damage experienced there during the event triggered by the 1946 Aleutian Islands earthquake.

Others initially evacuated to higher ground but returned before the event had finished. A series of waves is a common feature of far field tsunamis, with the first wave typically not being the largest. This was the case with the 1960 event with a series of 8 waves striking Hawaii. Thethird of these was most damaging, killing many of those who returned prematurely.

These avoidable casualties highlight the need for adequate tsunami mitigation measures, including education to ensure that people understand the warnings and the correct actions to take in the event of a tsunami. This is particularly important in areas exposed to far field tsunami hazard, where people may be less aware of the risk and there is enough time to evacuate. The introduction of a Pacific Tsunami Warning System in 1968 as a consequence of the event was a big step forward in improving such measures, the presence of which would no doubt substantially reduce the death toll were the event to reoccur today.

Mitigation efforts can also be supported by tools like the RMS Global Tsunami Scenario Catalog, which provides information on the inundation extent and maximum inundation depth for numerous potential tsunami scenarios around the globe. This can be used to identify areas at risk to far-field tsunami events, including those with no historical precedent, enabling the quantification of exposures likely to be worst impacted by such events.

Earthquake’s “Lightning”

Thunder is the noise made by the phenomenon of lightning. It was only in the mid 20th Century that we learned why lightning is so noisy. Even Aristotle thought thunder was caused by clouds bumping into one another. We now know that thunder is generated by the supersonic thermal expansion of air, as the electrical charge arcs through the atmosphere.

Like thunder, the earthquake is also a noise; it is so low pitched that it is almost inaudible, but so loud that it can cause buildings to shake themselves to bits. So what is the name of the phenomenon that produces this quaking noise?

We tend to lazily call it the “earthquake,” but that is as wrong as calling lightning “thunder.” We need a distinct word to describe the source of earthquake vibrations, equivalent to lightning being the cause of thunder. We need a word to describe earthquake’s “lightning.”

Like a spontaneously firing crossbow, the Earth’s crust is slowly loaded with strain and then suddenly discharged into fault displacement. Since 2000 we have become better at observing the two halves of the process.

One half concerns the sudden release of strain accumulated during hundreds or thousands of years over a large volume of the crust. We can now observe this strain release from continuous GPS measurements or from inter-ferometric analysis of synthetic aperture radar images.

The second half of the process is the distribution of displacement along the fault, which can now be reconstructed by inverting the full signature of vibrations at each seismic recorder.

Focusing on the earthquake vibrations means that we forget all the other consequences of the regional strain release.

For example, hot springs stopped across the whole of northern Japan following the 2011 Tohoku earthquake because the extensional release of compressional strain diverted the water to fill up all the cracks. In the elastic rebound of prolonged extension, half a cubic kilometer of water was squeezed out of the crust over nine months in the region around the last big extensional fault earthquake in the US in Idaho in 1983.

Sudden strain can cause significant land level changes; the city of Valdivia sunk 8 feet in the 1960 Chile earthquake, while Montague Island off the coast of Alaska rose 30 feet in the 1964 Great Alaska earthquake. Whether your building plot is now below sea level or your dock is high out of the sea, land level changes can themselves be a big source of loss.

Then, there are the tsunamis generated by all the regional changes in seafloor elevation due to earthquakes. In the 2011 Tohoku Japan earthquake, it was the subsequent tsunami contributed almost half the damage and almost all of the casualties.

So, what is the name of earthquake’s “lightning?” “Elastic rebound” describes one half of the process and “fault rupture” the other half. But no word combines the two. A word combining the two would have to mean “the sudden transformation of stored strain into fault displacement.” We could have called the origin of thunder “the sudden discharge of electrical charge between the ground and clouds,” but “lightning” slips more easily off the tongue.

There could be a competition to coin a new word to describe the earthquake generation process. Perhaps “strainburst,” “faultspring,” or, as the underground equivalent of lightning, “darkning.” We are scientifically bereft without a word for earthquake’s “lightning.”

 

An Industry Call to Action: It’s Time for India’s Insurance Community To Embrace Earthquake Modeling

The devastating Nepal earthquake on April 25, 2015 is a somber reminder that other parts of this region are highly vulnerable to earthquakes.

India, in particular, stands to lose much in the event of an earthquake or other natural disaster: the economy is thriving; most of its buildings aren’t equipped to withstand an earthquake; the region is seismically active, and the continent is home to 1.2 billion people—a sizeable chunk of the world’s population.

In contrast to other seismically active countries such as the United States, Chile, Japan and Mexico, there are few (re)insurers in India using earthquake models to manage their risk, possibly due to the country’s nascent non-life insurance industry.

Let’s hope that the Nepal earthquake will prompt India’s insurance community to embrace catastrophe modeling to help understand, evaluate, and manage its own earthquake risk. Consider just a few of the following facts:

  • Exposure Growth: By 2016, India is projected to be the world’s fastest growing economy. In the past decade, the country has experienced tremendous urban expansion and rapid development, particularly in mega-cities like Mumbai and Delhi.
  • Buildings are at Risk: Most buildings in India are old and aren’t seismically reinforced. These buildings aren’t expected to withstand the next major earthquake. While many newer buildings have been built to higher seismic design standards they are still expected to sustain damage in a large event.
  • Non-Life Insurance Penetration Is Low but Growing: India’s non-life insurance penetration is under one percent but it’s slowly increasing—making it important for (re)insurers to understand the earthquake hazard landscape.

Delhi and Mumbai – Two Vulnerable Cities

India’s two mega cities, Delhi and Mumbai, have enjoyed strong economic activity in recent years, helping to quadruple the country’s GDP between 2001 and 2013.

Both cities are located in moderate to high seismic zones, and have dense commercial centers with very high concentrations of industrial and commercial properties, including a mix of old and new buildings built to varying building standards.

According to AXCO, an insurance information services company, 95 percent of industrial and commercial property policies in India carry earthquake cover. This means that (re)insurers need to have a good understanding of the exposure vulnerability to effectively manage their earthquake portfolio aggregations and write profitable business, particularly in high hazard zones.

For (re)insurers to effectively manage the risk in their portfolio, they require an understanding of how damage can vary depending on the different type of construction. One way to do this is by using earthquake models, which take account of the different quality and types of building stock, enabling companies to understand potential uncertainty associated with varying construction types.

A Picture of India’s Earthquake Risk

India sits in a seismically active region and is prone to some of the world’s most damaging continental earthquakes.

The country is tectonically diverse and broadly characterized by two distinct seismic hazard regions: high hazard along the Himalayan belt as well as along Gujarat near the Pakistan border (inter-plate seismicity), and low-to-moderate hazard in the remaining 70 percent of India’s land area, known as the Stable Continental Region.

The M7.8 Nepal earthquake occurred on the Himalayan belt, where most of India’s earthquakes occur, including four great earthquakes (M > 8). However, since exposure concentrations and insurance penetration in these areas are low, the impact to the insurance industry has so far been negligible.

In contrast, further south on the peninsula where highly populated cities are located there have been several low magnitude earthquakes that have caused extensive damages and significant casualties, such as the Koyna (1967), Latur (1993), and Jabalpur (1997) earthquakes.

It is these types of damaging events that will be of significance to (re)insurers, particularly as insurance penetration increases. Earthquake models can help (re)insurers to quantify the impacts of potential events on their portfolios.

Using Catastrophe Models to Manage Earthquake Risk

There are many tools available to India’s insurance community to manage and mitigate earthquake risk.

Catastrophe models are one example.

Our fully probabilistic India Earthquake Model includes 14 historical events, such as the 2001 Gurajat and 2005 Kashmir earthquakes, and a stochastic event set of more than 40,000 earthquake scenarios that have the potential to impact India, providing a comprehensive view of earthquake risk India.

Since its release in 2006, (re)insurers in India and around the world have been using the RMS model output to manage their earthquake portfolio aggregations, optimizing their underwriting and capital management processes. We also help companies without the infrastructure to use fully probabilistic models to reap the benefits of the model through our consulting services.

What are some of the challenges to embracing modeling in parts of the world like India and Nepal? Feel free to ask questions or comment below. 

Exceedance 2015: In the Books

It’s been quite a week here in Miami – full of palm trees, ocean views…and catastrophe risk management.

Throughout the week, our keynote speakers discussed hot topics in science, catastrophe modeling, and risk management:

  • We kicked off the week with keynotes from Hemant Shah, Paul Wilson, Ben Brookes, and Daniel Stander discussing RMS’ vision for the future and how catastrophe modeling can enable innovation and growth within the (re)insurance industry and beyond.
  • Patricia Grossi shed light on earthquake risk in Latin America, and there were more than a few misty eyes as Laurence Golborne regaled us with tales of risk management from his time as minister of mines and energy in Chile, where he led the rescue of the “Los 33” miners trapped underground for more than two months.
  • Rick Knabb, director of the National Hurricane Center, explained why awareness is central to the mission of the NHC; educating the public about the need to prepare increases the ability to recover.
  • Robert Muir-Wood explained that the biggest concentrations of risk and gradients of risk are coastal, necessitating state-of-the-art modeling of storm surge, tsunami, and liquefaction in order to mitigate this risk.

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Hemant and other members of the RMS leadership team answered questions on-stage during an “Ask Us Anything” session. Here are a few highlights:

  • What’s your vision beyond 2020?
    • Eric Yau: We want to create an open platform that unlocks innovation potential for our clients and partners.
    • Matthew Grant: Our goal is to allow clients to underwrite business that isn’t possible today. We will work together to grow the broader (re)insurance market.
  • What can I do to help Nepal? 
    • Paul VanderMarck: We work with Build Change, an organization aligned with our mission of mitigating risk. We recommend them as an organization and are matching employee contributions. Build Change is starting a program in Nepal using the same playbook that has already been successful in areas such as Haiti and Japan.
  • Suppose you were to start from scratch today – would you do anything differently? 
    • Mohsen Rahnama: When we started, we didn’t have any of the tools we have today. We take advantage of and implement technology to approach problems in a systematic way. Technology allows us to build better models.

In addition, we were thankful to have many of our clients and partners not just attend, but present at Exceedance. BMS, JLT RE, Munich Re, Aon Benfield, Risk Frontiers, Holborn Corp, ARA, Willis Re, Guy Carpenter, TigerRisk, SCOR, and Price Forbes all presented during the “Alternative Views of the Market” track which provided insight from across the industry.

  • Munich Re showed impactful videos of homes under 100 mph winds, emphasizing the difference in performance of structures built to various standards.
  • Willis Re advocated for deterministic modeling and developing alternative views of risk by considering different sizes of events and “what if” analyses.
  • Guy Carpenter explained how to define critical events by aligning the level of loss to specific outcomes such as lost earnings, ratings watches, and ratings downgrades.

And finally, we salsa-ed the night away to the sweet tunes of two-time Grammy-nominated Latin band Palo during EP, the Exceedance Party, at LIV nightclub.

I hope you enjoyed the week and found it insightful and thought-provoking. We hope to see you all back at the Fontainebleau Miami Beach Hotel next year, where Exceedance 2016 will take place from May 16 to 19.

The Nepal Earthquake: What We Know So Far

Delhi, India also at high risk of earthquakes from the same collision zone

The earthquake in Nepal is very much a developing story. However, based on what we know, it’s shaping up to be the worst natural disaster this calendar year, particularly because Nepal is remote, economically challenged, and not resilient to an earthquake of this magnitude. The ground shaking appears to have been stronger in Kathmandu than the 1934 earthquake, possibly making it the largest we’ve seen in Nepal in almost a century.

As of April 29, Time Magazine reports that the death toll has crossed 5,000. It’s expected that casualties could surpasses 10,000, as rescue efforts continue.

While it is too early to draw substantial conclusions about the disaster—and the final casualty number—we are able to share some insight into the event and risk in the area:

Nepal EQ Map 1

Most large earthquakes in this region occur along the plate boundary collision zone:

In this region, the Indian continent dips beneath the Tibetan plateau. The Himalayan mountain chain and Everest are products of this collision zone, and the area at risk stretches from Assam and southern Bhutan to the east through Nepal to the mountains of northern Pakistan in the west. The magnitude 7.6 earthquake in Kashmir in 2005, which caused terrible damage to villages either side of the Pakistan-India border resulting in 86,000 fatalities, occurred along this plate boundary.

Nepal’s fragile economy will be affected:  Nepal is one of the world’s poorest countries. The country’s main revenue sources are agriculture and tourism, including foreigners looking to scale Mount Everest. Reports indicate that the damage caused in recent days could substantially set back the economy of Nepal.

Kathmandu was hit hardest:The fault rupture of the Nepal earthquake extended eastward from its epicenter, passing underneath the city of Kathmandu.

Historic buildings throughout the city have been reduced to rubble. Darbar Square, which attracts millions of tourists annually and is vital for the Nepalese economy, has been razed. An overwhelming majority of homes in what’s known as the Gorkha district have been destroyed. Furthermore, many villages in the region needing assistance are in mountainous areas, making rescue efforts difficult.

Structures in Nepal were already at risk: The Nepalese population resides in unreinforced masonry structures that are highly vulnerable to earthquake ground shaking. Secondary hazards are of concern as well—including landslides and liquefaction.

Aid efforts are already helping to make Nepal more resilient

The widespread damage to infrastructure will be a significant setback for Nepal, which relies on agriculture and tourism. Organizations such as Build Change are already on site helping affected communities to start rebuilding their homes using disaster-resistant designs to increase the country’s resilience to future earthquakes. If you would like to support Build Change’s work, you can donate to their fund by clicking here.

Delhi, India is at high risk of earthquakes from the same collision zone

Between Gujarat and the Himalayas lies the mega-city of Delhi, which is exposed to significant earthquake risk from the surrounding plate movement.

EQ_Nepal_GIS_29Apr2015_v4

Delhi’s seismic risk comes from both the Himalayan thrust zone, where the recent Nepal earthquake struck, and the transition zone between the stable continent and the active plate boundary—also the site of the 2001 M7.7 Gujarat earthquake, which resulted in 20,000 fatalities.

According to the Bureau of Indian Standards’ seismic zoning map, Delhi is within a “high seismic risk zone.” Combined with an older building stock made of unreinforced masonry and reinforced concrete, the city’s people, buildings, and economy are at significant risk.

Delhi is the northern industrial hub of India, with significant manufacturing exposure, including textiles, chemicals, fertilizers, and leather goods. Delhi’s service sector has also grown enormously in recent years, with expansion in information technology, telecommunications, and banking.

Projects piloting risk reduction in the city—through building retrofits or enhanced building inspections—have been underway and offer some degree of comfort that the seismic risk issues in Delhi are being acknowledged.

We will continue to monitor the situation in Nepal. If you have questions about the disaster please feel free to ask them in the comment section.

Water, Water Everywhere: The Effect of Climate Change on Florida

Climate change has been a hot topic in Florida for quite some time. Just last week, President Obama visited the Everglades to discuss the need to address climate change now.

RMS partnered with the Risky Business Initiative to quantify and publicize the economic risks the United States faces from the impacts of a changing climate. In Florida, there is a 1% chance that by 2100, 17% of current Florida property value will be underwater, causing a $20.7 billion increase in annual flooding losses, and $681 billion worth of property loss due to sea level rise.

RMS_Florida_ClimateChange_Poster_FINAL-page-001 2

Bob Correll, principal at the Global Environment Technology Foundation leading the Center for Energy and Climate Solutions: Just last week a report commissioned by the G7 was released to the foreign ministers, including Secretary of State John Kerry, titled “A New Climate for Peace: Taking Action on Climate and Fragility Risk.” It outlines seven things we need to worry about as the changing climate becomes more evident, including sea-level rise and coastal degradation.

Brian Soden, atmospheric sciences professor, University of Miami: Sea level rise is the impact of climate change that I’m most worried about. The rate of sea level rise has almost doubled in Miami over the past decade. We are the canary in the coal mine. If you increase sea level by just three feet, which is in the middle of the range of projections, the Everglades would pretty much be gone.

Robert Muir-Wood, chief research officer, RMS: At RMS we attempt to be completely objective about risk. We attempt to take the full scientific understanding and translate it into information about risk and the associated cost. Financial markets are smart. Future risk is already starting to affect the current value of property.

Matthew Nielson, senior director of global governmental and regulatory affairs, RMS: Regulations generally fall into two buckets: curbing emissions so we can temper this problem and thinking about future development and planning to account for future sea level rise.

But what do we do now? There are a lot of things to think about – one is drainage issues. Another is access to fresh water.

Paul Wilson, senior director of model development and lead modeler for the Risky Business Initiative, RMS: It will be interesting to see how things play out – if the response will come as a result of science and gradual sea level rise, or only after a major catastrophe.

Muir-Wood: It’s very hard for communities to take action until they’ve had a disaster. As we’ve seen with Hurricane Katrina and Superstorm Sandy, suddenly there’s all sorts of enlightened thinking about future risk, such as investments in sea defenses. Unfortunately, it often takes a catastrophe to impact on decisions about mitigating risk.

Paul VanderMarck, chief products officer, RMS: You can only build a sea wall so high before it’s not worth living here anymore.

Soden: The biggest question I ask myself is “when do I sell?”

Correll: A year ago the WEF came to us and asked if we would be willing to work with their young global leaders. We had the head of all Shell operations in the Middle East. We had the former head of GE operations in India. They are getting the message. They walked away saying, “we need to rethink our business plans to plan for the future.”

Modeling provides a lot of the underpinnings to make decisions that are outside of the norm. The past is no longer a prologue to the future.

Risk, Models, and Innovations: It’s All Interconnected

A few themes came through loud and clear during this morning’s keynote sessions at Exceedance 2015.

RMS’ commitment to modeling innovation was unmistakable. As RMS co-founder and CEO Hemant Shah highlighted on stage, RMS worked hard and met our commitment to release RiskLink version 15 on March 31, taking extra measures to ensure the quality of the product.

Over the past five years, RMS has released 210 model upgrades and 35 new models. With a 30% increase in model development resources over the last two years and 10 HD models in various stages of research and development, RMS has the most robust model pipeline in its history.

As Paul Wilson explained, HD models are all about providing better clarity into the risk. They are a more precise representation of the way a physical damage results in a (re)insurance loss, with a more precise treatment of propagation of uncertainty through the model, designed to deal with losses as closely as possible as the way claims occur in real life.

HD models are the cornerstone of the work RMS is doing in model development right now. HD models represent the intersection of RMS research, science and technology. With HD models we are not limited by software – we can approach the challenge of modeling risk in exciting new ways.

And it’s more than just the models – RMS is committed to transparency, engagement, and collaboration.

RMS’ commitment to RMS(one) was also clear. Learning from the lessons of the past year, RMS developing an open platform that’s not just about enabling RMS to build its own models. It’s an exposure and risk management platform that’s about enabling clients and partners to build models. It’s about analytics, dynamic risk management and more.

RMS(one) will be released, judiciously and fully-matured, in stages over the next 15 months,starting with a model evaluation environment for our first HD Model, Europe Flood, in autumn 2015.

And, Hemant emphasized that starting later this calendar year, RMS will open the platform to its clients and partners with the Platform Development Kit (PDK).

In addition, RMS(one) pricing will be built around three core principles:

  • Simple, predictable packages
  • In most cases, no additional fees for clients who simply want continuity in their RMS modeling relationships
  • Clearly differentiated high-value packages at compelling prices for those who wish to benefit from RMS(one) beyond its replacement as a superior modeling utility to RiskLink

The overall goal of RMS’ commitment to modeling and technology innovation is to capitalize on a growing and ever-changing global (re)insurance market, ultimately building a more resilient global society. RMS is working with industry clients and partners to do so by understanding emerging risks, identifying new opportunities to insure more risk, developing new risk transfer products, and creating new ways of measuring risk.

As Ben Brookes said, we only have to look at the recent events in Nepal to understand that there are huge opportunities – and needs – to improve resilience and the management of risk. RMS’ work for Metrocat, a catastrophe bond designed specifically to protect the New York MTA’s infrastructure against storm surge, showed the huge potential for the developing alternate methods of risk transfer in order to improve resilience.

And during his session, Daniel Stander pointed out that only 1.9% of the global economy is insured. As the world’s means of production shifts from assets to systems, RMS is working to understand how to understand systems of risk, starting with marine, supply chain, and cyber risk, tackling tough questions such as:

  • What are the choke points in the global shipping network, and how do they respond under stress?
  • How various events create a ripple effect that impact the global supply chain – for example, why did the Tohoku earthquake and tsunami in Japan cause a shortage of iPads in Australia, halt production at BMW in Germany, and enable a booming manufacturing industry in Guangzhou?
  • How do we measure cyber risk when technology has become so critical that it is systemically important to the global economy?

global shipping

Leaving the keynotes, a clear theme rang true: as the world becomes more interconnected, it is the intersection of innovation in science and technology that will enable us to scale and solve global problems head on.

Exceedance 2015: Welcome to Miami!

We have arrived in the City Under the Sun – Miami, FL – for Exceedance 2015, where the oceanfront views are providing the perfect backdrop for a week of engaging sessions, invigorating discussion, and plenty of networking opportunities.

For those of you joining us here at the legendary Fontainebleau Hotel, meet us poolside tonight at 5:30 p.m. to kick things off at the welcome reception. For those of you who couldn’t make it this year, make sure to follow RMS on Twitter, LinkedIn and here on the blog for #Exceedance news, insights, and photos.

With more than 60 sessions across eight different tracks, there is no shortage of thought-provoking content and discussions to be had. Download the mobile app to help you manage your schedule and maximize your week.

Here are a few highlights as you plan out your week:

Keynote Speakers: The keynote sessions are definitely not to be missed. This year, our lineup of keynote speakers includes:

  • Hemant Shah, RMS co-founder and CEO
  • Dr. Robert Muir-Wood, RMS chief research officer
  • Laurence Golborne, former Chilean minister of mines and energy
  • Richard Knabb, director of the National Hurricane Center
  • Dr. Patricia Grossi, senior director of model product management, RMS
  • Ben Brookes, vice president of capital markets, RMS
  • Paul Wilson, vice president of model development, RMS
  • Daniel Stander, managing director, RMS

Interconnected Risks: Cyber, contingent business interruption, and pandemic risk have all made headlines in the past year. Check out interconnected risk sessions where we’ll share the latest research into the unique challenges of interconnected risks and discuss lessons learned from the events such as the Ebola pandemic, Superstorm Sandy, and cyber attacks.

High-Definition Modeling: Make sure to attend our HD modeling sessions, held throughout the week, to learn about the methodology behind our HD models and how greater precision with a simulation-based approach will give insurers greater insight into and management of their risk.

Risk Management and the Allure of Latin America: For the first time, we are hosting an entire track focused on Latin America. The rapid expansion of insurance in Latin America and the Caribbean is creating opportunities for both insurers and reinsurers. We’re looking forward to diving deeper into how risk modeling tools can unlock opportunities in the region.

The Lab: The Lab is the perfect place to swing by between sessions to meet RMS experts and learn about everything from version 15 models and software to RMS Hosting Plus to capital market solutions. And stop by the Mini Theater for a great lineup of speakers on everything from analytical services to philanthropic partnerships.

 “EP” – The Exceedance Party: As always, we’re celebrating a full week of activities with the “EP” on Wednesday night. This year we’ll be at the LIV Nightclub, where you can be sure to find good food, drinks, and lively conversation along with two-time Grammy-nominated Latin band, Palo!

We’re glad to have you and are looking forward to a great week ahead!

RMS supports NYC tech talent in Flatiron School partnership

On February 6, 2015, United States Secretary of Commerce, Penny Pritzker visited The Flatiron School in New York City to learn more about the program, its students, and the companies that are leading the way in hiring skilled workers in a data-driven economy. It was such an honor to be invited to a closed door round table with Secretary Pritzker.

Despite the standard formalities, Secretary Pritzker walked around as if she were a student herself. She asked questions of the founders and spoke to students about their work. At the table sat representatives from Microsoft, The New York Times, New York Tech Meetup, Wiser, DoSomething.org, UniteUS, Alphasights, and me from RMS. Secretary Pritzker welcomed us, mentioned the traffic on the West Side Highway, and then jumped right in to asking questions. The session was being covered “on background” (meaning that we weren’t quoted) by Catherine Rampell from the Washington Post and Katie Couric.

The forum was casual but direct. Secretary Pritzker’s interests included understanding why companies recruit from schools like Flatiron (RMS has hired 2 students; welcome Sam Tran and Jimmy Kuruvilla) versus traditional university programs; how to get other companies to look outside of the traditional schools; how skills-driven programs are helping shrink the unemployment rate; and why an internship/apprenticeship is so valuable.

RMS forged a relationship with the Flatiron School just after they opened in 2012. Since then we have been a partner to the school and to the student population. Not only have we participated in the science fairs and as mentioned above, hired students from the program, but earlier this year we committed to being a NYC Tech Talent Pipeline Industry Partner. New York City Mayor Bill de Blasio is leading this initiative with the hope that the $10 million plan will support the growth of Silicon Alley (NYC high-tech industry).

The NYC Web Development Program is designed for 18-26 year olds without college degrees looking to gain skills as developers and creative technologists. The students who enter this program receive the $15,000 Flatiron School training free of charge. RMS’ commitment to this program is to hire 2 interns from the NYC Web Development Fellowship program. We look forward to welcoming these interns during the summer of 2015.

When the 45-minute session wrapped, Secretary Pritzker immediately sat down with Katie Couric for a one on one. They discussed the unemployment report, manufacturing, and educational programs like the Flatiron School.

The honor was mine to not only meet Secretary Pritzker but to be at such an important conversation about representing RMS. I am thrilled that we as a company are committed to hiring such a diverse group of intellectuals and that education, no matter where it is obtained, is still at the core of who we are as an organization.

For more information about this event, see other blog posts:

Germanwings 9525: Why didn’t this happen before?

On the tenth anniversary of 9/11, I attended a commemorative meeting at the British Academy in London. A professor of international relations recounted how he watched the horrific scenes of destruction of the World Trade Center in the company of his five year-old daughter. She posed this intriguing question: why didn’t this happen before?

Just a few years before she was born, in December 1994, Algerian terrorists attempted to fly a hijacked plane into the Eiffel Tower. Fortunately, French commandos terminated the hijacking when the plane stopped for refueling. This was a near-miss. The American writer of counterfactual fiction, Philip Roth, observed in his book The Plot Against America that: “the terror of the unforeseen is what the science of history hides.” The destruction of the Eiffel Tower is not an event in terrorism history—just one of numerous ambitious plots that were foiled.

With the current state of historical and scientific knowledge, there are very few unknown hazard events that should take catastrophe risk analysts by surprise. Almost all either did happen before in some guise, or, taking a counterfactual view, might well have happened before. Take for example the great Japanese tsunami and magnitude 9 earthquake of four years ago. It is doubtful that this was the strongest historical earthquake to have struck Japan. The Sanriku Earthquake of 869 may merit this status, based on archaeological evidence of widespread tsunami deposits.

Disasters are rare, and preparedness depends crucially on knowledge of the past. Aviation is the safest mode of travel; there are very few crashes. However there are numerous near-misses, where one or more of the key flight parameters is dangerously close to the disaster threshold. There is a valuable learning curve associated with the lessons gained from such operational experience.

The direct action of the co-pilot in the tragic crash of Germanwings Flight 9525 on March 24, 2015 raises again the question: why didn’t this happen before? As recently as November 29, 2013, it did. A Mozambique Airlines plane flying from the Mozambican capital Maputo to Luanda in Angola crashed, killing 27 passengers and its six crew. The pilot locked himself in the cockpit keeping out the co-pilot. He ignored alarm signals and manually changed altitude levels.

Quite apart from this and other historical precedents for fatal crashes caused by direct pilot action, there must be many more near-misses, where timely intervention has inhibited direct action by pilots suffering from some psychological disorder. The reporting of incidents is a crucial part of aviation safety culture, so is advancing the learning curve. Analysis of such data would contribute to accident risk assessment and subsequent risk mitigation measures.