Not all risk is created equal. The most successful insurers uncover opportunities amid increasing global uncertainty when armed with a deep understanding of risk. Learn more about taking control of your modeling to: - Avoid “personal” catastrophe events - Identify unique opportunities for your business - Interact more productively with regulators and rating agencies

1. 1Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
OWNING YOUR VIEW OF RISK IN A
CHANGING MARKET
Mark Cravens – Vice President, Professional Services
December 10, 2015

2. 2Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
AGENDA
CONCEPT
IMPACT
ELEMENTS
PROCESS
What does it mean to “Own Your View of Risk”?
Benefits of enabling your view of risk
Key components in building a view of risk practice
Building, evolving, and refining your practice

3. 3Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
Introduction

4. 4Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
WHAT DOES IT MEAN TO OWN
YOUR VIEW OF RISK?
Know Your View
 Understand your unique business attributes
 Clarify and prioritize goals and challenges
 Identify practical and effective risk and business
management options

5. 5Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
WHAT DOES IT MEAN TO OWN
YOUR VIEW OF RISK
Own Your Risk
 Establish a practice to quantify, qualify, and manage risk,
uncertainty, and volatility
– Information development
– Analytical and empirical
– Interpretation and synthesis
 Respect and reflect the variances in prospective business
behavior

6. 6Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
Oakland
Firestorm 1991
Insurance Loss: $2.9 billion (2014 dollars)
Source: Aon Benfield
Exposure concentration | Economic variance

7. 7Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
Northridge
Earthquake 1994
Insurance Loss: $24.4 billion (2014 dollars)
Vulnerability | Unexpected losses
Source: Insurance Information Institute

8. 8Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
World Trade
Center 2001
Insurance Loss: $43.4 billion (2014 dollars)
Clash | Information response
Source: Insurance Information Institute

9. 9Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
0%
5%
10%
15%
20%
25%
30%
-15% -10% -5% 0% 5% 10% 15% 20%
RoE in Extreme Catastrophe Years
(‘01, ‘04, ‘05, ‘08, ‘11, ‘12)
RoEinMildCatastropheYears
(‘00,‘02,‘03,‘06,‘07,‘09,‘10)
Performance vs. Catastrophe Risk
Superior
risk-reward
performance
Below-average
performance in
benign years
Below-average
performance in
bad catastrophe
years
DEMONSTRATED VALUE

10. 10Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
ELEMENTS OF A VIEW OF RISK
Data
Development, detail, consistency,
exceptions
Quality
Extension/Integration

11. 11Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
ELEMENTS OF A VIEW OF RISK
Data
Development, detail, consistency,
exceptions
Quality
Extension/Integration
Exposure
Hazard/Risk
Prospective behavior
Accumulations

12. 12Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
ELEMENTS OF A VIEW OF RISK
Data
Development, detail, consistency,
exceptions
Quality
Extension/Integration
Correlation
Perils/Events
Contingent risk
Clash
Exposure
Hazard/Risk
Prospective behavior
Accumulations

13. 13Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
ELEMENTS OF A VIEW OF RISK
Data
Development, detail, consistency,
exceptions
Quality
Extension/Integration
Correlation
Perils/Events
Contingent risk
Clash
Volatility
Sensitivities/Variability
Uncertainty
Business parameters
Exposure
Hazard/Risk
Prospective behavior
Accumulations

14. 14Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
ELEMENTS OF YOUR OWN VIEW OF RISK
Data
Exposure
Correlation
Volatility
All insurance carriers have unique business
dimensions…
– Underwriting appetite
– Distribution channel
– Producer relationships
– Coverage forms
– Pricing approach
– Large loss(es) influence
– Claims settlement approach

15. 15Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
EXAMPLE APPROACH TOWARDS OWNING
A VIEW OF CATASTROPHE RISK
Stage 1:
Current
State
Data and quality
Exposure management
Modeled risk
Stage 2:
Initial View
Underwriter experience
Expert opinion (e.g.,
modeling companies)
Historical industry
findings
Stage 3:
Additional
Analyses
Claims analysis
Sensitivity tests
Multiple models
VIEW OF RISK

16. 16Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
EXAMPLE APPROACH TOWARDS OWNING
A VIEW OF CATASTROPHE RISK
Stage 1:
Current
State
Data and quality
Exposure management
Modeled risk
Stage 2:
Initial View
Underwriter experience
Expert opinion (e.g.,
modeling companies)
Historical industry
findings
Stage 3:
Additional
Analyses
Claims analysis
Sensitivity tests
Multiple models
VIEW OF RISK
Business Benefits
Risk Selection and Pricing | Capacity Management | Post-Event Insight

17. 17Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
INVESTING: ENABLING BUSINESS GOALS
GOAL: Access better business more efficiently
DATA EXPOSURE CORRELATION VOLATILITY
Identify superior risk profiles
more rapidly
Establish criteria to drive
target portfolio performance
Reduce potential for
surprises

18. 18Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
Summary
Owning your view of risk
in a changing market
Escalating
Need
View of Risk =
Unique
Business
Effective
Solution
Design Is Key

19. 19Copyright © 2015 Risk Management Solutions, Inc. All Rights Reserved. December 15, 2015
QUESTIONS?
For more information, contact Ryan Neugebauer at
Ryan.Neugebauer@rms.com or sales@rms.com.