Practitioners view geo-spatial variability of insurable losses and claims as a significant risk factor in the definition of key business processes and outcomes. This second order, volatility type of a risk factor impacts the construction of insurance rates and reinsurance treaty premiums, the computation of reserve capital, the management of concentrations of physical and financial risk. With increased emphasis on analytics, modeling and measuring of all types of physical and financial variability and volatility, both temporal and geo-spatial, new effort in enriching the scope of metrics, which capture the nature of second order risk is much needed. In its first generation of second order metrics are pair-wise by nature. Significant effort by academics and practitioners is under way to develop a new generation of such metrics, which capture and express the complexities of concentration and inter-connectedness of multiple risk factor of both physical geo-spatial and financial nature. Clarity and unambiguity of the definition of second order geo-spatial risk metrics helps (re)insurance practitioners to adopt these statistical and computational methodologies effectively and promptly. Furthermore in significance, clarity, consistence and coherence of second order geo-spatial risk metrics allows practitioners to relate them efficiently to the main business workflows of (re)insurance firms, apply them in effective measurement, mitigating and hedging situations, and finally to propagate them easily to executive level decision makers. We recently put together an experimental paper on this topic, and we are very pleased to have it available for early review [https://www.casact.org/research/wp/index.cfm?fa=workingpapers]. Feedback and comments are sincerely welcomed - the critical kind most of all.
Category: Climate/natural disasters: Climate change, Floods/storms
Location: New York, NY, USA