3 November 2009
Willis is a large insurance and reinsurance broker based in London. A key part of their primary business lies in arranging insurance for catastrophe risk – i.e. losses from mega-events such as an earthquake in Tokyo or San Francisco, a storm surge flood in London or a volcanic eruption near to Mexico City. Calculating the risks associated with these events is a challenging task, but of course the stakes are high as large events can induce catastrophic losses. Parts of the reinsurance industry was badly burnt by Hurricane Katrina for example. So, in order to calculate the risks and potential losses reinsurance companies use Catastrophe Models (usually called Cat Models), which are complex simulations of the impacts of large events. Getting these models to sensibly estimate potential losses is difficult – and of course requires a good knowledge of the science of the hazard in question.
A few years ago Willis approached one of my colleagues, Prof. Stuart Lane, and I to see if we would be interested in joining a research network that Willis would support. The idea was to bring together key parts of the reinsurance industry and top academic researchers on hazards and risk in order to improve the ways in which risk is modelled and handled in the insurance industry. And so the Willis Research Network was born. Initially the network consisted of seven very carefully chosen UK academic institutions – Durham, Bristol, Reading, City, Cambridge, Exeter and Imperial. Membership of the network is by invitation only, and active participation is ensured through the sponsorship by Willis of a research fellow in each institution.
A few years on, and the network is now an extraordinary entity. That initial group of seven has been joined by universities from the USA (e.g. Princeton and NCAR), Japan (e.g. Kyoto), Italy (e.g. Bologna), Germany (e.g. GFZ Potsdam) and Australia (e.g. SEA). I am pretty sure that it is now the largest and most dynamic academic-industrial hazard and risk network in the world, and it is generating some amazing research.
In the last couple of days the network announced associate membership of ten new institutions, including the British Geological Survey, the UK Met Office, The UK National Oceanography Centre, the Ordnance Survey and GNS Science in New Zealand. Research now spans natural perils, visualisation, social dislocation and financial management. I suspect that over the next few years this network will come to dominate research into catastrophic risk management. The publications section is well worth a look, not least because there are some very useful background presentations there from some of the world’s top hazards researchers.