Mohsen Rahnama, Ph.D. is chief risk modeling officer and general manager of models & data at RMS

As market dynamics ramp up the need for smarter ways to gain competitive edge, Mohsen Rahnama, chief risk modeling officer and general manager of models & data, explains how RMS is responding to meet the needs of its clients.

In today’s rapidly changing market, innovation and agility drive competitive advantage. RMS has served the global risk and insurance market for over 25 years, and innovation has been our consistent imperative while we supported the market as it defined and implemented robust catastrophe risk management practices. By all measures, the global (re)insurance industry is now more resilient than it has ever been.

Yet the pace of change has never been faster, and never have we been more committed to our clients’ success. They need to own their view of risk, which requires us, in turn, to deliver new levels of modeling transparency, configurability and service. Clients need new scientific insights on faster cycles, compelling us to increase our own agility and optimize and scale our development processes. They also want models to close the gap on coverage to enable expansion into emerging markets globally. Our customers need more granular and expressive analytics which allow more data-driven differentiation and more innovative forms of coverage.  To support their pursuit of opportunity and new classes of business, such as cyber, they need sound modeling to create new products and facilitate responsible growth.

For our clients, this is a long list of needs. For RMS, it is a mission plan.

And the demands are growing for more efficient data management and modeling to deliver cost-effective insights into the heart of increasingly dynamic and analytics-intensive workflows. In response, we are embracing change ourselves, evolving and adapting to the demands of a rapidly changing market.

Responding to the industry’s needs

This is an exciting time at RMS. We have released our first suite of high-definition (HD) models including the RMS® Japan Typhoon HD Model, the RMS Europe Inland Flood HD Models, and the RMS® New Zealand Earthquake HD Model. This Spring (2017), we will release comprehensive updates to the RMS North America Earthquake models and RMS North Atlantic Hurricane models in RiskLink® 17.0, Risk Assessor, Cyber 2.0, as well as several new and upgraded models for Asia. Our teams have worked with great dedication to create the models so they meet the current needs of our clients.

OUR CLIENTS NO LONGER SIMPLY USE OUR MODELS, THEY PLAY A FULL AND ACTIVE ROLE IN THEIR DEVELOPMENT, HELPING TO FUTURE-PROOF THE PROCESS AND EVOLVE CAPABILITIES AT A RATE NOT PREVIOUSLY POSSIBLE

With technology and computing power having advanced significantly since the early days of catastrophe models, we have more capability to address key elements of model and loss uncertainty in a much more systematic way. RMS model assumptions undergo an increasingly stringent process of refinement, where actual events, scientific advances, increased data and technological upgrades combine to enhance implementation, improve responsiveness, heighten granularity and, ultimately, reflect as accurately as possible the potential risk.

Cloud capacity is constantly expanding and supports vastly superior data processing power, which is delivering a level of granularity that extends into the inner workings of the individual policy. This ability to assess data from ground level up is supporting risk assessment at a much higher resolution. And the ability to extend the scientific capability of our models to HD allows a holistic quantification of the risk while addressing the elements of the model and exposure uncertainties. Across multiple regions, perils and business units, the combination of HD models and powerful analytics provides a more dynamic assessment of risk, giving firms more opportunities to differentiate and diversify.

Removing barriers

We see how important transparency is to our clients, and are delivering modeling advances that a more transparent. We work with clients to explore the data, to explain the rationale, and to demonstrate the value we deliver.

Communication is another area we are investing in to facilitate the market’s management of risk. Communication between parties across the insurance industry – insurance, brokers, reinsurance, regulatory and capital markets – will be vastly different in the future, especially with regards to data transfer and use of analytics.

Collaborating via a common risk management platform will be needed to manage the efficiency, accurate data collection, and improvements in underwriting workflow processes that will be demanded. It will also enable more robust and informed risk assessments, portfolio rollout processes, and risk transfers. We have also committed considerable investment and resources to model the interconnectedness of risk.

It is this future-gazing that has culminated in the launch of the RMS(one)® platform, which represents a paradigm shift in modeling capabilities by providing the functionality, scalability and flexibility to allow firms to build a fully customizable and integrated view of risk across their whole organization. By strengthening the link between modeled losses and underlying exposures, the RMS(one) platform enables real-time risk reporting of portfolio metrics, and delivers that data to the point of impact – the underwriting front line.

By building an open-source platform, we have evolved our design aesthetic and philosophy to be more client-focused – no longer building ‘cathedrals’ but rather creating solutions that are much more flexible, responsive and fluid. Our clients no longer simply use our models – instead they play a full and active role in their development, helping to future-proof the process and evolve capabilities at a rate which was not previously possible.

We are excited by the future and remain committed to helping our clients as they evolve into the new market leaders. And as we continue to enhance and develop our platform investment, we will also expand our model development capability, having grown our teams by 20 percent in the last two years to be able to build the new HD models, while maintaining the existing RiskLink products.