Press Releases
Linking business and science to address climate and weather risk
Release Date : 09 June 2010
The University of Reading's Walker Institute has been working with Willis Re to investigate climate risk and its impact on the insurance industry and the global population it serves.
This is the subject of this year's Walker Institute Annual Lecture on the 10 June. Rowan Douglas from Willis Re and Chairman of the Willis Research Network, will be talking about how the latest climate research can support effective risk management and public policy decision-making and so improve business resilience to a changing climate.
"Whether it's our financial institutions, local communities, or our environment, climate models light our path toward finding a more sustainable future," said Mr Douglas. "They help companies, governments and insurers both avoid and manage the impacts of undesirable extremes."
Professor Nigel Arnell, Director of the Walker Institute, says: "I'm convinced that effective business and science partnerships can help to make consideration of climate-related risk an inherent part of business planning. With the real risks that climate change is bringing, such partnership can only serve to increase adaptability and resilience and help businesses to thrive. I'm pleased to see this working in practice through our links with Willis Re."
Scientists from the NERC-funded National Centre for Atmospheric Science, working with the Met Office, have developed some of the most detailed global climate models available today. Working with Willis, these models are being applied to understand the distribution of natural catastrophe risk. The models operating on powerful new platforms are set to revolutionise the operation of the global environmental risk and insurance industries in future years.
The long-standing partnership between Wills Re and the Walker Institute is being further strengthened with a new Willis Professor of Climate and Weather Risk for Insurance. This new Chair joins the growing Willis-supported Climate Modelling & Risk Laboratory at the Walker Institute, currently led by Professor Pier Luigi Vidale, which will serve as a leading hub for this vital science and critical integration with industry systems.
High resolution climate modelling provides a representation the world's oceans, atmosphere, land surface, and weather systems to provide a simulation of the planet's behaviour. These ground-breaking techniques, using some of the world's largest supercomputers, liberate scientists and policy-makers from the limitations of relying on historical data alone to gain a further insight on the likely location, frequency and severity of extreme events - such as intense hurricanes or severe European storms.
Climate scientists working with business in this way will help to exploit the potential of high resolution climate models to advance catastrophe modelling in the reinsurance industry. Improved catastrophe models will help to ensure that reinsurance companies are not unknowingly accumulating risk that could lead to large losses and destabilise the industry. It is estimated that if this led to only a 5% reduction in average insured losses due to storm damage, this could be worth between £62-130million per annum to the UK insurance industry.
The UK reinsurance sector is worth about £7.2 billion. This is a global industry and the UK is a high-cost business environment. The creation and exploitation of knowledge (such as the incorporation of dynamic modelling of tropical cyclones into catastrophe models used by reinsurance companies / brokers) is one factor that will help the UK to maintain its competitive position as a centre for reinsurance and support its growth in the future