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Managing evolving risk with future-forward technology
Managing evolving risk with future-forward technology
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    Risk. It is changing at what seems like lightning speed. Its growth is exponential, its impact increasingly severe. Managing escalating risk in this day and age of climate change can be a monumental challenge. Climate change and increased population density in high-risk areas have created a “perfect storm” of risk exposures.  
    Losses from natural disasters were US$ 68bn in the first half of 2020 alone. Only 40 percent, or US$ 27bn of those losses were insured. The need for improved ways to assess natural catastrophe and climate-related risk, as well as develop a plan to manage and mitigate that risk, has never been greater.

    Innovation for new world risk evaluation

    Evaluating this type of escalating risk exposure is critical to insurers in the U.S. and around the globe, many of whom are struggling to manage their portfolios, grow their business, and remain profitable. It is clear that new technology, tools, and risk strategies are not just savvy moves, they are key to a resilient and sustainable future for insurers and their clients. 

    Today, taking a more 360-degree view of risk, and actively developing longer-term prevention strategies, is key. Historical data alone is no longer a sufficient predictor of emerging/potential risks. Risk Managers, Underwriters, Actuaries, and Brokers all need to focus on examining more current, real-world data that is both immediately relevant as well as predictive. 

    Future-forward risk management

    Munich Re has been at the forefront of climate study for over five decades. We employ experts in meteorology, climatology, seismology, geoinformatics, data analytics, and engineering. These scientists and specialists combine our company’s deep institutional knowledge and wealth of data with cutting-edge expertise to help clients identify key natural catastrophe and climate change risks that could adversely impact them. This expertise has helped us develop technologically advanced tools designed to provide the kind of foresight that can truly reshape the way the industry manages and measures today’s risks. These innovative tools are part of the Munich Re’s Risk Suite. 

    Location Risk Intelligence within the Risk Suite includes a modular set of risk assessment tools. Solutions available include a Climate Change Edition, Wildfire HD Edition, and Natural Hazards Edition. All the Munich Re assessments are based on historical data, as well as locations throughout the world, along with future-focused input from experts and clients, and factors in 50- and 100-year scenarios analyses. Single location and full portfolio reports are available, featuring Portfolio Maximum Loss (PML) curves, exposure visuals, and risk scores. 

    These risk assessments are based on performance indictors and are easily visualized in different, detailed map types as well as color coding. A variety of risk layers can be applied simultaneously. Downloadable and printable assessment reports are provided for all Risk Modules. The Risk Suite tools have both a web-based standalone offering that allows clients to evaluate a single location or upload their portfolios, and an API version for flexible integration into clients’ existing tools and processes.

    Choosing the edition that fits your needs

    Natural Hazards Edition. A wide variety of natural perils pose grave threats in North America and throughout the world. The Natural Hazards risk tool provides access to the world’s most comprehensive collection of natural hazards data spanning 40 years. It offers industry-leading filter options and geospatial services that integrate cloud-based data, IoT, and AI. Available scores include: Earthquake, Volcano, Tsunami, Wildfire, River Floods, Storm Surges, Tornado, Lightining, and Hail. The tool provides guidance for diversifying natural hazards risk – with risk hot spots and accumulation areas in a portfolio or particular market easily identified – helping clients map out areas they wish to avoid or further diversify their market locations. 

    Wildfire HD Edition. As wildlife hazard increases and intensifies, so does a need for better risk assessment and management tools. The size of recent losses in the U.S. and Canada highlights the large accumulation potential that can often be underestimated. The Wildfire tool currently features a zoning map for Alberta and British Columbia in Canada, and for the U.S. states of California, Colorado, and Arizona – to help support wildfire risk management. Higher resolution maps allow for better resolution of Wildland Urban Interfaces (WUI), featuring key zones for high-risk and high-value locations, with each 1.5-mile-wide WUI divided into five detailed zones. 

    Climate Change Edition. Climate change, largely driven by human activity, has a major influence on weather-related natural disasters and can dramatically alter a region’s risk situation. Munich Re’s innovative physical climate hazard assessment services, available through this Risk Module, are based on scientific frameworks and modelling. Short- and long-term risk assessment is possible, with scenarios possible up to 80 years. Based on the Intergovernmental Panel on Climate Change (IPCC), a United Nations body that established a framework which formed the basis for the Paris Agreement, the module services use Representative Concentration Pathway (RCP) scenarios for atmospheric greenhouse gas concentrations from the latest IPCC Assessment Report. The module features moderate, intermediate, and severe RCP scenarios that use projection years 2050 and 2100, with 20-year periods used for more robust trend estimate projections. It also includes the Climate Expert Mode, which provides more detailed information on the climatological stress indices.  

    Munich Re Experts
    Dr. Jonathan Meager
    Dr. Jonathan Meager
    Senior Project Manager
    Risk Management Partners