Category Archives: Disaster Risk Reduction

Japan: Waking Up to Flood Risk

Hemant Nagpal, director, Model Product Management, RMS

Manabu Masuda, senior director, Modeling, RMS

Junichi Sakai, lead modeler, Model Development, RMS

Many factors made the recent devastating flooding and subsequent landslides and mudslides in Japan during July stand out as a defining event. From the intensity of the rainfall, the extent of the area affected and the loss of life, the sheer scale of this event was summarized by an official from the Land, Infrastructure, Transport and Tourism Ministry in Japan, who said “This is the first-time damage has extended to such a wide area since the (2011) Great East Japan Earthquake.”

As of July 16, Japan’s National Police Agency reported that 219 people had been killed, and many remain missing. Data provided on July 20 from the Fire and Disaster Management Agency (FDMA) reported damage to around 40,000 buildings across 31 prefectures, and just over half of these prefectures had 50 or more buildings damaged. Some of the worst-hit areas include Okayama, Fukuoka, Hiroshima, Ehime, Kyoto, Yamaguchi, Gifu, and Kochi.

At least 270 elementary and junior high schools were damaged; the commercial sector experienced widespread damage and destruction from landslides and rivers breaching their banks or defenses. Operations were suspended at Mazda Motor, chemicals giant Teijin and brewers Asahi Shuzo, among others, disrupting supply chains far from the disaster areas. Only 30 percent of large enterprises account for flooding in their continuity plans, according to recent Cabinet Office survey.

Overall, this event is the nation’s deadliest weather disaster since 322 people were killed in floods and landslides across western Japan in July 1982. Early estimates indicate economic losses could be higher than US$1 billion with significant impact on manufacturing and tourism. The insured losses may take some time to develop. What caused this event to happen?

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Where Is Insurance in the Post-Grenfell Tower View of Fire Risk?

The first professionals on the stand in the Grenfell Tower Inquiry were the London Fire Brigade, quizzed on their lack of training around managing evacuation from the devastating tower block fire in North Kensington, West London on June 14, 2017. Coming soon, the inquiry’s focus will turn to the architects and fire engineers, the manufacturers of cladding material and the regulatory procedures for determining safety.

Yet, one actor conspicuously missing from this parade of experts is insurance.

You might think that insurance would, by now, be leading the agenda in calculating the fire risk to tower blocks and showing how mitigative action, such as removing or replacing flammable cladding, would directly convert into both lower risk and lower premiums. For this calculation around fire risk has the potential to drive other responses, including which buildings are too dangerous to be habitable.

Yet this calculation cannot come from empirical data on fire losses, as supports most actuarial fire pricing, because this fire is without precedent, at least in the U.K. Instead it will have to be the product of “large building” stochastic fire risk modeling.

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Resilience 2018: Driven by Purpose

There is nothing quite like a “banging EP” to make me feel young again. But that wasn’t the only aspect of my most recent trip to Miami that brought out the millennial in me.

If you missed Exceedance 2018 a few weeks back, you probably also missed Resilience 2018. Embedded every year within Exceedance, RMS holds a space for policymakers and business leaders to collaborate to a very important end: ensuring local communities and regional economies are resilient to the shocks and stresses they face.

Much has been written about how millennials seek work that is meaningful (Schullery, 2013); work which solidifies their self-efficacy (Chalofsky + Cavallaro, 2013). I also blog about the relationship between aims and actions; between purpose and profit.

And there’s some truth in the generational stereotypes. After all, research suggests that impact investing continues to “skyrocket.”

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China Reinsurance: Domestic or Global Expansion Both Require Risk Modeling

Paul Burgess, Client Director, Asia-Pacific, RMS

Erica Xue, Senior Product Manager – Model Development, RMS

In a country that according to the United Nations, between 1995 and 2015 experienced the largest number of natural disasters globally, and with these losses largely uninsured, China is at the start of a journey to close its protection gap between economic and insured losses — during a sustained period of rapid GDP growth. Examples such as the devastating Sichuan earthquake in 2008 which killed more than 80,000 people and caused US$125 billion in economic losses saw just 0.3 percent of losses covered by insurance. Floods in southern China during the summer of 2016 saw economic losses of US$20 billion, the second costliest event of the year. But again, according to Munich Re, just two per cent was insured.

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EXPOSURE Magazine: Looking Back, Looking Forward

The latest edition of EXPOSURE is essential reading for risk professionals, as we look back at what can be learned from last year’s events and look forward to the future including new challenges faced by the global risk management community and new opportunities to capitalize on.

EXPOSURE offers a unique perspective with a clear mission “… to provide insight and analysis to help insurance and risk professionals innovate, adapt and deliver.” And with a new North Atlantic hurricane season nearly upon us, and memories of HIM (Hurricane Harvey, Irma and Maria) fresh in the industry’s collective consciousness, EXPOSURE talks to the industry and paints a picture of a mature, responsible insurance sector that managed HIM with certainty and confidence. Cyber has also demonstrated its potential as a global systemic risk, and EXPOSURE looks at how events such as an outage of a major cloud services provider could generate economic losses as high as Superstorm Sandy.

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Exceedance: Time to Make Risk More Transparent

As the sun shone over the Biscayne Bay at the start of the second full day at Exceedance, our keynote guest speaker, Jeff Goodell, energy and environmental expert, investigative journalist and author of numerous books including The Water Will Come asked a provocative question in his opening slide. It simply said, “Goodbye Miami?”

Jeff said that he was at home being in the company of fellow “catastrophists” and the risk management community at Exceedance, but this is not always the case. When talking about climate change and sea-level rise, he sometimes felt as if he was Richard Dreyfuss in the movie Jaws. Dreyfuss played oceanographer Matt Hooper, a character who continually warned the Mayor of Amity Island to close the beach because of the risk of shark attacks. The Mayor ignored the advice, due to the economic impact of closing the beach … but [spoiler alert] the shark kept coming. Jeff remarked that sea-level rise is the shark, and it’s bigger and more dangerous than we first anticipated.

Jeff Goodell presenting at Exceedance

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Exceedance: Client-focused Transformation

The first full day of Exceedance clearly set the direction that RMS is taking towards transformation — as a strategic partner helping clients to succeed in a time of rapid change. Karen White, chief executive officer for RMS, made her keynote debut on the Exceedance stage, sharing her background working with technology companies during similar game-changing times, and expressing her excitement of the here and know and what lies ahead.

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The Happy Face of Retrofitting

Corina Sutter is Director, Government and Regulatory Affairs at RMS, and is based in London. She joined fellow employees from RMS and RMS clients on our annual Impact Trek in Nepal during March this year. This is Corina’s account of her time in Nepal.

When you think about strengthening a building to make it more resilient to seismic events, does “retrofitting” come top of mind? And if you have heard of retrofitting, do you know why it is more cost-effective, and in many instances more suitable than simply rebuilding? This awareness challenge is what Build Change faces in Nepal; with regards to retrofitting not everyone is aware or convinced — yet.

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Using Catastrophe Models to Promote Resilience

Arriving in Kathmandu for the 2018 RMS Impact Trek, I was already aware of the many years that RMS has provided support for Build Change and its work in areas worst hit by catastrophic disasters. Our first day in the Build Change office was a crash course in their local objectives and challenges. Day Two saw us on a field trip to nearby Kirtipur to survey common building practices. It was a lot of information to process and it was not immediately clear to me what “impact” we could make during our short visit.

But it was later in the week — when, admittedly, the jet lag finally wore off — that I finally caught on.

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The HayWired Earthquake Scenario: An RMS View on Fire Following Earthquake Risk

New findings into the effect of a magnitude 7.0 earthquake originating from the 74 mile-long (119 kilometer) Hayward Fault in the California Bay Area, suggests that fire following earthquake alone could see more than 52,000 single-family homes burn. Earlier this month, the United States Geological Survey (USGS) released new results for their HayWired scenario, a scientifically plausible magnitude 7.0 earthquake on the Hayward fault. The hypothetical HayWired earthquake occurs at 4:18 p.m. on April 18, 2018, the anniversary of the magnitude  7.8 earthquake which struck San Francisco in 1906. The mainshock ruptures the fault along its length for about 52 miles (83 kilometers). The impact of such an event on one of the most densely populated and interconnected areas of the U.S. West Coast — with a population of about seven million people — would be disruptive.

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