At Baden-Baden for this year’s reinsurance meeting, White described to The Insurer a new risk management field to deal with climate change that is emerging in the insurance sector:
“It’s to develop strategies for dealing with what’s coming sooner, and for also dealing with what’s coming later.
“It’s not just the financial risk, but the risk resiliency, emergency planning, asset management, the whole economic system… and trying to figure out the impacts as best we can.”
Understanding the impacts of a changing climate hinges on collaboration between three areas of science, she continued.
“One is the maturing area of climate science; two is the quality of the data we’re relying on; and finally, it’s the field that we’re in, it’s catastrophe modeling and modelling the impacts of this climate change.”
For RMS, the key to understanding future effects lies in the past.
“We’ve incorporated the impacts of climate change all the way back to the 1800s into our models today, for example, in hurricane analysis with the data we’ve put in to feed our models,” she said.
“Going forward, we look at things, again in the hurricane model, to do with changes of the sea level to understand the impacts there… we’re getting more and more fine granularity to do so in the future.”
To piece together a clearer, big-picture view of climate change, the cat modeler plans to “aggressively” pursue the possibilities of probabilistic modelling– and how the industry can respond.
“We’re not just looking at one impact of climate change, but the fulsome impacts of it, and understanding how can we run various scenarios. How can we run various stress tests to really understand the bounds?” said the RMS CEO.
“Importantly, [we need to understand] the bounds at any given point in time, so we can take action toward resilience and to make sure that the industry doesn’t get caught unawares,” White concluded.