Neena Saith presented on the topic of Secondary Perils at the 11th Conference on Catastrophe Insurance in Asia, held in Taiwan on July 18-19.

1. ‘SECONDARYPERILS?’IMPACT
OFNON-MODELEDRISKSTO
THEINSURANCEINDUSTRYIN
SEASIA
Neena Saith
Director, Model Solutions
Robert Muir-Wood
Chief Risk Officer

2. 60% OF TOTAL
INSURED LOSSES
WERE NOT
CAPTURED BY
MODELS IN 2011

3. ©2013 Risk Management Solutions, Inc.
3 STEPS TO GREATER RESILIENCY
Know your
exposure
Understand
scenarios
Quantify
your risk
Do I have a concentration of exposure that could be
impacted?
Are there scenarios that could impact multiple
locations?
What techniques can I use to quantify my risk?

4. RMS RISK
EXPOSURE
ACCUMULATION
CATALOGUE
(RMS REACT)
REACT now to
proactively manage
your non-modeled
risk
RMS Risk Exposure
Accumulation Catalogue
Industrial cluster database
Global tsunami zones
Volcanic eruption risk
Extreme liquefaction areas
Asia flood footprints

5. Model gap analysis
What’s in and what’s out of a cat model

6. BEYOND THE
MODELED
WORLD -
MISSING
SOURCES OF
RISK
SUPPLEMENTAL
CAUSE OF LOSS
Same cause of loss, same region,
supplemental causes of loss:
Hurricane Irene
UNMODELED CAUSE OF LOSS
Same region – separate
unmodeled cause of loss:
China winter storms
UNMODELED REGION
MISSING EXTREME
PARAMETERIZATIONS
Same cause of loss, same region,
missing extreme parameterization:
Tohoku Earthquake
Cambodia Flood

7. Type 1
Additive perils to events already modeled
(‘blind spots’)

8. TAIWAN PERIL
AUDIT
What perils is
Taiwan exposed to?
What is and is not
modeled in Taiwan?
Non-modeled
Non-modeled
Non-modeled
Models
available
Models available
but missing
extreme
parameterisation
Models
available

9. SECONDARY
PERILS FROM M9
EARTHQUAKES
CLOSE TO
TAIWAN
Major Tsunamis >10m
Extreme landsliding
Strong long period ground
motions
Major earthquake aftershocks

10. IMPLICATIONS
OF
MAGNITUDE 9
EARTHQUAKE
ON THE
RYUKYU
SUBDUCTION
ZONE >10m
Tsunami

11. IMPLICATIONS
OF A
MAGNITUDE 9
EARTHQUAKE
ON THE MANILA
ARC
SUBDUCTION
ZONE >10m
Tsunami

12. Kaohsiung, SW Taiwan –
largest harbour in Taiwan
– c 1 million people live in
coastal districts
Frontline >10m Tsunami in
Manila Arc M9 EQ

13. Extent of aftershocks
after M9 earthquakes
adjacent to Taiwan
Taiwan to same scale

14. LANDSLIDE
RISK

16. Disrupted communications expected after M9 earthquake close to Taiwan

17. ©2013 Risk Management Solutions, Inc.
City centre looting
OTHER POTENTIAL EARTHQUAKE CORRELATIONS
Professional liability Contamination liability

18. ©2013 Risk Management Solutions, Inc.
TYPHOON
SOULIK,
12
JULY
2013

19. ©2013 Risk Management Solutions, Inc.
TYPHOON FLOOD AND MUDSLIDE DAMAGE
Damage to buildings in Kaohsiung county (left) and Taitung county (right), Taiwan after
Typhoon Morakot in 2009

20. Secondary perils – Garbage landslide after typhoon: Baguio,
Philippines 2011

21. Type 2
Missing extreme parameterizations
‘Hidden peaks’

22. RMS STUDY IDENTIFIES 15 EQ SOURCES CAPABLE OF M9+ EVENTS -
POSSIBILITY FOR DAMAGE BEYOND CURRENT MODEL PREDICTIONS
8
1
2
34
56
7
9
10
11
12
13
14
15

23. ULTRA
LIQUEFACTION
Stress test
accumulations in
high liquefaction
potential locations

24. Type 3
Missing perils (in modeled countries)
‘The overshadowed’

25. • Rapidly sinking delta
• Large areas of city below sea level
• Over extraction of groundwater
• Poorly maintained flood defences
New Orleans 2005
• In the path of frequent
tropical cyclone storm
surges
• Home to 450,000
people
• Well-rehearsed
evacuation plans
HIDDEN GULF OF
THAILAND STORM
SURGE RISK: MANY
SIMILARITIES WITH
NEW ORLEANS
Bangkok 2015
• In the path of
infrequent tropical
cyclone storm surges
• Home to 8.5 million
people
• No material evacuation
plans
Five typhoons have entered the Gulf
of Thailand since 1950
Wind profile
from TC
Surge levels
from TC

26. STORM SURGE
FLOOD IN
BANGKOK
Cyclone track
2011 warning that
Bangkok “will sit under
nearly 2m of water by
2030”
Feb 11th 2013
Deputy Prime Minister
Plodprasop Suraswadi
"After April we'll start
studying this project full
steam”

27. ©
Jenkins
et
al.,
2012
A simulated eruption from
Pinatubo:
§ VEI 6
§ Northwesterly winds
§ Ash thicknesses ~200 mm in
central Manila (for this
scenario)
§ Only maps thicknesses for
urban areas (>400 people/km2).
White cells receive no ash or
contain <400 people.
§ A further 4 volcanoes lie within
200 km of Manila
Ash thicknesses (log scale):
>10,000
mm
(10
m)
1
mm
100
mm
Pinatubo
Manila
Jenkins, S., Magill, C., McAneney, J. and Blong, R., 2012. Regional ash fall hazard I: A probabilistic
assessment methodology. Bulletin of Volcanology, 74(7): 1699-1712.
Jenkins, S., McAneney, J., Magill, C. and Blong, R., 2012. Regional ash fall hazard II: Modelling results
and implications. Bulletin of Volcanology, 74(7): 1713-1727. Susanna.Jenkins@Bristol.ac.uk
VOLCANIC RISK OFTEN OVERLOOKED!

28. Type 4
Non-modeled territories
‘Cold spots’
(the perils of diversi-fiction)

29. GLOBAL PERIL
AUDITS
Saudi Arabia
Earthquake
Urban flash flood
Oman
Cyclone (flood and wind)
Flash flood
Tsunami
Brazil
Flash flood
Major river flood

30. KNOW YOUR
EXPOSURE
Determine if you are
insuring risks in
industrial clusters
Sectorial clusters of
exposure expanding
across Asia

31. PERFORMING
A RISK AUDIT
• Check coverages
• Geocode everything
• Understand the
motivations for
insurance purchase
• Evaluate the risk
management culture
Know your
exposure
Potential
for
Correlation
Understand
scenarios

32. OWN YOUR
VIEW OF RISK
Build greater resiliency
into your risk
management
framework by
managing risk outside
the models
Know your
exposure
Understand
scenarios
Quantify
your risk
RMS(one)/exposure analysis
REACT scenarios
REACT return period hazard maps
Fully probabilistic loss model

33. ©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