May 02, 2014
A Commitment to Model Development and Open Models
During Exceedance 2014 last month, we demonstrated that RMS(one) is a truly open risk management platform. At the event, RMS clients were the first in the industry to analyze the same exposure data sets with models from multiple providers on the same platform.
Adding support for third-party models enhances what we can offer to our clients in addition to our own commitment to model development. RMS is adding more countries and perils to our existing portfolio, which covers 170 countries and perils, and our model development team has grown by 25 percent over the past two years. Our motivation is to deploy science and engineering for real-world application to address the industry’s challenges.
We see new opportunities arising for the risk management industry as the world’s population, industrial output, wealth, and insured exposure continue to climb each year. However, these changes are resulting in increasing risk profiles for insurers, reinsurers, the capital markets, and beyond.
Our modeling team has galvanized around the RMS(one) platform to take advantage of all of the capabilities that can now be incorporated into catastrophe models.
Here are a few examples of the work underway:
Our flood modeling team is deploying graphics processing units (GPUs) to extend our hydrodynamic ocean storm surge modeling capabilities around the globe. We are applying this technology to the modeling of tsunami propagation across oceans.
We are doing new research to understand which earthquake sources may generate magnitude nine or greater earthquakes, as well as to identify what exact combinations of factors caused the severe liquefaction seen in some areas of Christchurch, where else this might occur, and how this can be linked to building damage.
In the world of tropical cyclones, we are learning new things about transitioning storms in Asia and how they impact wind patterns—and therefore risk—across Japan.
We are building high definition (HD) industrial exposure databases to complement risk analysis.
Our modeling teams are enthused by providing transparency about where uncertainties remain in the models and giving control to clients; users are able to create their own custom vulnerability curves and incorporate their own view with other aspects of models on RMS(one). Not only is RMS(one) an open platform; RMS models will be open.
For example, users of our future flood models will have the option to enter their own intelligence on flood defense locations, build their own vulnerability curves based on site engineering assessments, or to sensitivity-test the impact of defense failures at both a location and portfolio level.
Additionally, our clients will be better able to understand, write, and innovate new policy terms in the future. As an example, we have recently seen the loosening of terms and conditions around hours clauses for flooding at this year’s January renewals, as reinsurers responded to the competitive pressures posed by the influx of alternative capital. But this is being done without really knowing what those changes can have on a company’s risk profile. Future HD flood models on RMS(one) will allow companies to do so.
These are just a few of the initiatives underway as we continue our ongoing quest to bring science, engineering, and technology together to solve real-world problems.