©2013 Risk Management Solutions, Inc. ©2013 Risk Management Solutions, Inc.

RESILIENT RISK MANAGEMENT

Claire Souch, PhD VP, Model Solutions

©2013 Risk Management Solutions, Inc.

MODELING CHALLENGES

• Too many

surprises

• Can’t control key assumptions

• Lack of insight into drivers of risk

• Doesn’t facilitate understanding by all

PORTFOLIO MANAGEMENT UNDERWRITING OPERATIONS MODELS

©2013 Risk Management Solutions, Inc.

MODELS IMPROVE OVER TIME, BUT UNCERTAINTY REMAINS

uncertainty

250 yr. loss

©2013 Risk Management Solutions, Inc.

HOW RESILIENT ARE YOU?

Maximize return -

optimize to top of a

pinnacle?

Minimise regret - search out stable

plateaus?

Will I fall off a cliff?

©2013 Risk Management Solutions, Inc.

THE MARKET IS CALLING FOR A NEW PARADIGM

In the RMS development of catastrophe models, which explicitly acknowledges that

CATASTROPHE RISK IS CHARACTERIZED BY DEEP UNCERTAINTY

LEARNING IS ON-GOING

ONE SIZE DOESNT ALWAYS FIT ALL

©2013 Risk Management Solutions, Inc.

THE MARKET IS CALLING FOR A NEW PARADIGM

UNDERSTANDING IMPLIED BETS

ADAPT QUICKLY TO NEW INFORMATION

OWNING A VIEW OF RISK

In the Client understanding and use of cat models

©2013 Risk Management Solutions, Inc.

THE PATHS TO RESILIENT RISK MANAGEMENT

UNDER- STANDING IMPLIED BETS

OWNING THE VIEW OF RISK

ADAPTING TO ONGOING LEARNING

DIAGNOSTIC VIEWS AND SENSITIVITY TESTS

ADJUSTMENTS ALTERNATIVES OPEN PLATFORM

POST EVENT, INTERIM VIEWS, OWN EXPERIENCE

©2013 Risk Management Solutions, Inc. ©2013 Risk Management Solutions, Inc.

RMS – PROVIDING INDUSTRY REFERENCE VIEW

Build world-class (and increasingly

transparent) models with an

official RMS reference point

©2013 Risk Management Solutions, Inc.

PROVISION MULTIPLE VIEWS… IN A SINGLE, FAST, AUDITABLE PLATFORM

RMS REFERENCE

DIAGNOSTIC

ADJUSTED

ALTERNATIVE

YOUR OWN

“There is no single correct approach”

ABI Industry Good Practice for Catastrophe Modeling, Dec 2011

©2013 Risk Management Solutions, Inc. ©2013 Risk Management Solutions, Inc.

OPEN MODELING = ACCESS TO MODEL COMPONENTS

EXPOSURE

LOSS

PLA

RATES

VULNERABILITY

HAZARD

CONDUCT SENSITIVITY TESTS LEVERAGE YOUR OWN CLAIMS DATA AND RESEARCH GAIN COMPETITIVE ADVANTAGE MAINTAIN AN AUDIT TRAIL

©2013 Risk Management Solutions, Inc. ©2013 Risk Management Solutions, Inc.

UTILISE MULTIPLE MODELS

COMPARE MODELS SIDE BY SIDE FILL GAPS IN THE RMS MODEL SUITE

RMS MODELS YOUR OWN MODELS

IMPORT RESULTS FROM OTHER MODELS

©2013 Risk Management Solutions, Inc. ©2013 Risk Management Solutions, Inc.

BLEND MODEL RESULTS

BLEND RESULTS

CHOSE ONE MODEL OR BLEND MODEL RESULTS RMS(one) ENABLES YOUR BEST PRACTICE

©2013 Risk Management Solutions, Inc. ©2013 Risk Management Solutions, Inc.

“Risk management, we believe, should be about lessening the impact of events

we don’t understand”

- Naseem Taleb, Harvard Business Review