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What our experts are reading: Adrian Champion

We asked our MYRIAD-EU experts to share their recent reading recommendations relevant to their sector. This time, we have a look at the financial sector and how insurance companies are dealing with multi-hazard risks when it comes to insuring their own insurances.

The financial sector is represented on MYRIAD-EU by Aon’s Adrian Champion. He’s focusing in particular on the Re/Insurance sector; reinsurers provide insurance to the primary insurers, who provide insurance to you and I. Multi-hazard risks can have a large impact on the Re/Insurance sector as they are typically significant loss events that extend over a large geographical area, thus affecting a high number of primary insurers and reinsurers.

Adrian, what’s your reading recommendation to better understand how multi-hazard are impacting the reinsurance sector?

Unfortunately, there is very little literature on the impact of multi-hazard risks on the reinsurance sector. However, this type of risk forms part of our need to understand “grey swan events”, events which are potentially very significant, their possible occurrence may be predicted beforehand but their probability is considered small.

A recent paper by Gordon Woo, “A counterfactual perspective on compound weather risk”, discusses such events and how we might analyse them.

What did you find most interesting about the Gordon Woo’s article?

The reinsurance sector has a strong reliance on historical events to estimate the risk of such events occurring in the future. However, the historical record is relatively short, may not capture grey swan events and represents only one possible state of the atmosphere. Gordon Woo suggests looking at those events that could have been significant loss events, and alternative realisations of the past, to re-evaluate our view of risk.

MYRIAD-EU will hopefully do the same – challenge how we view individual risks from the past and create methods to analyse multi-hazard risks going forwards, to improve our resilience and understanding of them.