Advances in numerical weather prediction, data science, and open‐source software herald a paradigm shift in catastrophe risk modeling and insurance underwriting

Hamish Steptoe, Claire Souch and Julia Slingo

Risk Management and Insurance Review, 2022, vol. 25, issue 1, 69-81

Abstract: Recent advances in numerical weather prediction, combined with the new generation, high‐resolution climate simulations, and open‐source loss modeling frameworks, herald a move beyond the limited statistical representation of catastrophe risk based on past observations. In this new forward‐looking view of risk, an appreciation that our observed record of past natural catastrophes represents a limited sample of possible events, and that the statistics of weather and climate are changing as the planet warms, highlights a key limitation in traditional catastrophe modeling approaches that are built on defining statistical relationships using the observed record. Instead, ensembles of new spatially and dynamically consistent simulations of weather and climate provide physically plausible, but as‐yet‐unseen events at scales appropriate for making effective risk management and risk transfer decisions. This approach is especially useful in locations around the world where observational records are unobtainable or of short historical duration, such as in low‐income countries. We take a forward‐looking approach at the way that future catastrophe modeling and insurance underwriting could occur in response to these technological and scientific advances, using open‐source loss model frameworks.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/rmir.12199

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:rmgtin:v:25:y:2022:i:1:p:69-81

Access Statistics for this article

Risk Management and Insurance Review is currently edited by Mary A. Weiss

More articles in Risk Management and Insurance Review from American Risk and Insurance Association
Bibliographic data for series maintained by Wiley Content Delivery ().