Monthly Archives: November 2014

4 Things You Didn’t Know about Why it’s So Darn Cold!

The U.S. is currently experiencing a bout of cold weather in several regions, raising the question: are we in for another polar vortex winter like the bone-chiller we had last year? And if so, why? Here are four things you might not know about the current extreme cold weather streak in the U.S.

The current cold weather isn’t quite another polar vortex in the U.S. – yet. 

The polar vortex is a region of Arctic air that rotates around the North Pole in the Northern Hemisphere, trapping and containing the frigid air in its circulation. Every now and then, parts of the rotating pocket of cold air break off into smaller pockets that mobilize southward into regions like North America, bringing with them below-normal temperatures and stormy conditions.

Figure 1: General image of the Polar Vortex. Source: Accuweather.

As of now, the U.S. is not experiencing full-blown polar vortex effects; only part of the big Arctic air pocket has been displaced into the U.S., so it is more accurate to say that the country is experiencing an outbreak of Arctic air. Last year, most of the U.S. experienced exceptionally cold and snowy conditions, particularly east of the Rockies, as a result of the polar vortex. Early seasonal outlooks for this winter have indicated that this type of severe weather pattern is unlikely to repeat, though one cannot rule out more Arctic outbreaks like this one.

You can blame Super Typhoon Nuri in Japan.

Many of the world’s largep-scale climate systems and atmospheric patterns are interconnected. You may not know it, but Super Typhoon Nuri, which impacted Japan earlier this month as one of 2014’s strongest tropical cyclones, has played a key role influencing this recent cold air outbreak. Cold air from the polar vortex is separated from warm air by what’s called the polar jet stream; depending on atmospheric conditions, this jet stream can look flat or wavy. Big storms, like Nuri, can alter the jet stream’s shape, pushing parts further north (creating a “ridge”) or south (creating a “trough”) than normal.

Figure 2: Example of a jet stream’s ridges and troughs. Source: Skeptical Science

In Nuri’s case, remnants of the storm pushed part of the polar jet stream north over Alaska, creating a strong ridge. This in turn caused a deep trough to develop over much of the central U.S., making way for Arctic air associated with the polar vortex to flow into the lower 48. It is common for storms to affect the jet stream’s shape, but because Nuri was so intense, it influenced the jet stream enough to trigger a prolonged period of unseasonably chilly weather from North Dakota to New York.

Climate change could have something to do with it. 

Our climate is changing, but there are differing views on how climate change affects the polar vortex. Some posit that a warming climate may lead to more frequent cold air outbreaks due to increased sea ice melting. This would allow more energy to move into the atmosphere and weaken the jet streams, thereby increasing the likelihood of cold Arctic air escaping southward into regions like North America and Europe.

©iStock.com/SeppFriedhuber

Other scientists argue that cold air outbreaks are common and part of the natural variation of the climate. They also suggest that it is extremely hard to link a massive, long-term shift in climate (for example, global warming) to individual weather events. It’s also worth noting that the U.S. takes up less than 3 percent of the Earth’s surface, so even though this region is experiencing cold air outbreaks, there are other parts of the world experiencing record heat at the same time.

Other parts of the country could be in for abnormal weather due to El Niño.

Also affecting this winter’s temperatures is the weak central El Niño being forecast; this series of climatic changes happens when the tropical Pacific Ocean, particularly the central and eastern regions, becomes warmer than average. As the ocean gets warmer with respect to its average temperature, the stronger the El Niño signal. El Niño often results in changes to precipitation and temperature patterns throughout the world, including North America, and especially in the winter.

The most common impact is wetter-than-average conditions along the Gulf Coast, warmer-than-average conditions in the Northern Rockies and Pacific Northwest, drier-than-average conditions in the Ohio Valley, and, to a lesser extent, wetter-than-average conditions in California and the southwestern U.S. The weak El Niño forecast means that these impacts are possible, but not likely to be extreme.

Canada earthquake risk 85 years after the Grand Banks earthquake and tsunami

November 18 marked the 85th anniversary of one of the largest and deadliest earthquakes in Canadian history, one that reiterates the importance of managing all drivers of earthquake risk effectively in the region.

The 1929 Grand Banks earthquake and tsunami was a magnitude 7.2 event that occurred just after 5:00 p.m. NST approximately 155 miles south of Newfoundland and was felt as a far away as New York City and Montreal. The earthquake caused limited damage on land and water, including minor landslides, but triggered a significant tsunami that was recorded as far south as South Carolina and as far east as Portugal.

Sea levels near the Newfoundland coast rose between 6 and 21 feet, with higher amounts recorded locally through narrow bays and inlets, and the tsunami claimed 28 lives. Had this event occurred near a more populated region, such British Columbia or Québec, the impacts could have been much worse.

Figure 1: A home in Newfoundland gets dragged out of a nearby cove following the 1929 Grand Banks earthquake and tsunami. Source: Natural Resources Canada

An event like this shows just how complex the Canadian earthquake risk landscape can be and how important it is to keep that view of risk as up-to-date and accurate as possible. On average, Canada experiences approximately 4,000 earthquakes each year. Most are small, but some can be large, particularly along the west coast near Vancouver and Victoria. There, in what is known as the Cascadia Subduction Zone, the Juan de Fuca plate is sliding underneath North America, causing subduction earthquakes, which tend to be less frequent but more severe than other Canadian seismic sources.

RMS has been modeling Canadian earthquake risk since 1991, with the last model update in 2009. The model inherently or explicitly includes the impacts of nearly all drivers of earthquake damage in that part of the world, from ground shaking, landslides, and liquefaction to fire following.

In building, updating, and validating the model over the years, RMS has collaborated with leading Canadian researchers and engineers, including representatives from what is now known as Natural Resources Canada (NRCan). RMS also maintains strong relationships with key insurance organizations and regulatory bodies, such as the Office of Superintendent of Financial Institutions and the Insurance Bureau of Canada, to play a key role in influencing guidelines and practices throughout the Canadian earthquake market.

The next update to the RMS Canada Earthquake Model is targeted for 2016 as part of a larger RMS North America Earthquake Models update. Among other enhancements, the model will incorporate the latest seismic hazard data (2015), internal research by the RMS seismic hazard development team, and introduce a probabilistic earthquake-induced tsunami model that will include losses from inundation along impacted coastlines.

Together, these updates will reflect the latest view of earthquake hazard in Canada, enabling the market to price and underwrite policies more accurately, and manage earthquake portfolio aggregations more effectively.

Western Jihadists & the Risk They Pose to their Homeland

Since the start of the Syrian civil war in 2011, foreign jihadists from across the globe have travelled to Syria to fight the Assad regime. According to a report by the 9/11 commission, the civil war in Syria has attracted around 10,000 foreign fighters from more than 80 countries. A growing number of these foreign fighter contingents have also returned to Iraq determined to reignite sectarian tension in the region. While the majority of non-Syrian fighters are Middle Eastern, the influx of European, American, and Canadian born fighters is significant. A study done by the International Centre for the Study of Radicalisation at King’s College London on the number of foreign fighters in Syria found that 18% are from the West. Britons make up one of the biggest groups of Western fighters with Danes, Italians, and French not far behind.

The news that American Douglas McCain was killed while fighting in Syria also indicates that there are Americans currently in Syria fighting against the Assad regime. In February this year, Director of National Intelligence James Clapper told the US Congress that more than 50 Americans are thought to be fighting in Syria. Canada has also seen a rise in homegrown jihadists going overseas to fight. According to a report done by the Public Safety Canada, an estimated 130 Canadians have joined overseas conflicts, many of them gravitating toward Syria and Iraq to wage jihad. The influx of overseas jihadists is unprecedented. The figures exceed the number of foreign jihadists involved in Afghanistan during its decade of war and its subsequent violent aftermath. Unlike in Afghanistan, many are travelling overseas not to just train or provide financial logistical support, but to also participate in the conflict directly.

There are many reasons why so many individuals have traveled to Iraq and Syria to wage jihad. Many have been drawn in by predictions in a version of Islamic ideology that the apocalypse will take place in Greater Syria. Such narrative has been inflamed by stories of atrocities against Sunni Muslims alleged to be committed by the Alawite Assad regime.

Accessibility is also a factor. In contrast to other jihadi theaters such as in Afghanistan, Mali, and Somalia, Iraq and Syria are much more logistically accessible. Europol reports that many foreign jihadists have traveled through Turkey, a common vacation destination, which arouses no or limited suspicion. Most of the foreign jihadists have been assimilated to ISIL, also referred to as ISIS (Islamic State of Iraq and Syria), but not exclusively. Some have joined other salafi-jihadi rebel groups such as the Jabhat al-Nusra and Ahrar al-Sham.

These groups were founded by individuals who at one time were senior members of al-Qaida. They tend to be more inclusive, highly organized, and much better financed than their more moderate counterparts such as the Free Syrian Army (FSA). The foreign fighters are not only getting indoctrinated ideologically, but are also given training on operational tactics. Many are instructed in using improvised explosive devices (IEDs), car bombs, and suicide attacks.

From a threat perspective, foreign jihadi involvement in both Iraq and Syria could impact the global terrorism risk landscape in multiple ways. First, the returning jihadis potentially could revitalize their cause in their homeland and act as a conduit reconnecting local groups to the global jihad. Second and more importantly, there is also a risk that some of these veterans may attempt a terrorist attacks back in their homeland. While the majority of jihadist foreign fighters do not end up attacking their home countries, a small number do and they often prove more capable and proficient than those without any fighting experience.

Given the stronger counter terrorism environment in the West, such attacks will more likely fall under the category of lone wolf terrorism attacks. These are individuals who work alone or in very small groups and do not seek any type of external assistance to execute their operation thus making it difficult for the authorities to gather enough intelligence to thwart any potential attack. Returning jihadists with proficiency in the local language and the ability to understand Western society can execute and plan their terrorism plot without raising much suspicion. While these homegrown lone wolf plots are much harder to detect and stop, their attacks tend to be limited to smaller attack types.

Current counter-terrorism practitioners assert that ISIS and its foreign contingent are interested in attacking western cities but question whether they have the ability to orchestrate a large-scale attack such a car bomb in cities such as in Toronto or London given the strong counter terrorism environment in these cities. Thus, it appears lone wolf attacks such as assassinations, beheadings, and kidnappings are the more likely scenarios. Despite these changes in the global terrorism landscape, RMS continues to recommend clients to use the standard risk outlook for its suite of probabilistic terrorism models.

What to expect this 2014-2015 Europe Winter Windstorm Season

When it rains in Sulawesi it blows a gale in Surrey, some 12,000 miles away? While these occurrences may sound distinct and uncorrelated, the wet weather in Indonesia is likely to have played some role in the persistent stormy weather experienced across northern Europe last winter.

Weather events are clearly connected in different parts of the world. The events of last winter are discussed in RMS’ 2013-2014 Winter Storms in Europe report, which provides an in-depth analysis of the main 2013-2014 winter storm events and why it is difficult to predict European windstorm hazard due to many factors, including the influence of distant climate anomalies from across the globe.

Can we predict seasonal windstorm activity during the 2014-2015 Europe winter windstorm season?

As we enter the 2014-2015 Europe winter windstorm season, (re)insurers are wondering what to expect.

Many consider current weather forecasting tools beyond a week to be as useful as the unique “weather forecasting stone” that I came across on a recent vacation.

I am not so cynical; while weather forecasting models may have missed storms in the past and the outputs of long-range forecasts still contain uncertainty, they have progressed significantly in recent years.

In addition, our understanding of climatic drivers that strongly influence our weather, such as the North Atlantic Oscillation (NAO), El Niño Southern Oscillation (ENSO), and the Quasi-Biennial Oscillation (QBO) is constantly improving. As we learn more about these phenomena, forecasts will improve, as will our ability to identify trends and likely outcomes.

What can we expect this season?

The Indian dipole is an oscillation in sea surface temperatures between the East and West Indian Ocean. It has trended positively since the beginning of the year to a neutral phase and is forecast to remain neutral into 2015. Indonesia is historically wet during a negative phase, so we are unlikely to observe the same pattern that was characteristic of winter 2013-2014.

Current forecasts indicate that we will observe a weak central El Niño this winter. Historically speaking this has led to colder winter temperatures over northern Europe, with a blocking system drawing cooler temperatures from the north and northeast.

The influence of ENSO on the jet stream is less well-defined but potentially indicates that storms will be steered along a more southerly track. Lastly, the QBO is currently in a strong easterly phase, which tends to weaken the polar vortex as well as westerlies over the Atlantic.

Big losses can occur during low-activity seasons

Climatic features like NAO, ENSO, and QBO are indicators of potential trends in activity. While they provide some insight, (re)insurers are unlikely to use them to inform their underwriting strategy.

And, knowing that a season may have low overall winter storm activity does not remove the risk of having a significant windstorm event. For example, Windstorm Klaus occurred during a period of low winter storm activity in 2009 and devastated large parts of southern Europe, causing $3.4 billion in insured losses.

Given this uncertainty around what could occur, catastrophe models remain the best tool available for the (re)insurance industry to evaluate risk and prepare for potential impacts. While they don’t aim to forecast exactly what will happen this winter, they help us understand potential worst-case scenarios, and inform appropriate strategies to manage the exposure.

Ebola in the US: How big of problem are we looking at?

As mentioned in my previous blog post, Ebola has the potential to be one of the deadliest epidemics in a century, but the primary area of concern is Western Africa, where the virus is most prevalent. However, as cases pop up in the U.S., concerns are rising, as evidenced by the acute media analysis and discussion around the first case in New York, for example.

Based on RMS modeling, we estimate that there will be between 15 and 130 cases in the U.S. between now and the end of the year—less than 1 case for every 2 million people. Our calculations assume that American medical professionals working with infected people in West Africa will account for the majority of cases. We simulated the number of new U.S. cases based on the existing infection rates among the American medical workers; this technique incorporates our projections for future West African caseloads and medical staff on the ground in the next two months, based on RMS’s epidemic scenario model. We then further modeled the virus’s spread once back in the U.S., taking into account the preparedness and higher quality of treatment facilities here versus the affected countries in West Africa.

The high end of the range is likely a slight overestimate as our calculations exclude automatic quarantining measures that some areas of the US are implementing. These measures can both reduce the number of contacts (people who come into contact with the infected person) for the imported cases, as well as increase the travel burden on U.S. volunteers planning to support the effort in Africa; this in turn could potentially reduce the number of people who actually make it over to the affected region.

The U.S. is prepared to handle the caseload even if it hits the upper range of 130 new cases. At any given time between now and December, specialized Ebola biocontainment facilities will have 11 beds available, which is enough to cope with the maximum weekly caseload in most of (but not all) of our modeled projections. In the more extreme scenarios, we still expect hospitals nationwide that have at least one Ebola treatment bed in place to handle overflow. Even if the reality over the next few months resembles a very pessimistic situation, it will be manageable given the U.S.’s higher capacity for managing cases.

Catastrophe modeling is an art and a science. The interesting, albeit challenging, part about calculating a range for something like this is that so much is contingent on estimates. The very nature of the virus and the exponential way the epidemic spreads means our estimates of the uncertainty in the variables are amplified in the number of cases. Our estimate is largely dependent on when affected regions reach the tipping point, where the number of new daily cases declines rather than increases. Everything is interconnected – the pace at which the epidemic spreads directly affects the tipping point, which then affects the need for treatment and number of professionals, which in turn affects the potential number of cases that can be imported back to the U.S.

As with all catastrophes we model, understanding risk is the first step toward mitigating and managing it.