Catastrophic Modeling

1. Catastrophic Modeling Philippe Breneman Dr. Gasper FIN 340 MWF Creighton University

2. Topics to Discuss� Catastrophic Risks Definition Consequences Catastrophic Modeling Insurers Side Insured Side

3. Catastrophic Risk Definition Low frequency, high severity events that are directly associated with sever consequences. Examples Earthquakes, Tornadoes, Hurricanes, Toxic Releases�

4. Catastrophic Risk Consequences Direct Financial Loss Business Interruption Loss of Market Share Third Party Liability claims

5. Direct Financial Loss In 1998, natural disaster and other weather related events accounted for $52 billion in financial loss in the U.S. alone.

6. Business Interruption & Loss of Market Share Unpredictability of Events Production Effect on Stock Price/Market Share Multi-National

7. Third Party Liability Claims A liability that is incurred by someone or some business other than the business that directly incurred the loss. Example Injured employees

8. Catastrophic Modeling: Insurer View Underwriting Process Research Company Geographic Site Monetary Valuation of Land and Containments Premiums and Deductibles

9. Catastrophic Modeling: The Insured View Technology Opening doors Simulation Reading the Results Canadian Approach �Top-Down� �Bottom-Up� CANADAQUAKE