Changing risks demand dynamic approach – Thomson

The head of the new Gallagher Research Centre (GRC), launched at the Monte Carlo Rendezvous by broker Gallagher Re has told Emerging Risks, the industry has to use the power of global academia to get ahead of the rapidly changing risk environment.

Dr Tina Thomson, (above) global head of research, at the GRC said the centre will work in tandem with research teams and universities across the world to tap into the world’s most advanced thinking to enable the broker to better inform its clients of the risks they face, and those which are in the horizon.

“While natural catastrophe and climate change research continue to be a priority, the evolving complexity of risk over the past two years has clearly demonstrated why it is essential the GRC has a wider remit to more accurately capture and quantify the risks posed by unmodelled, emerging and man-made perils. All of which are becoming more self-evident,” she explained.

Thomson, added while the talk at the rendezvous had been the impact of climate change and the rising exposures to natural perils, the threat of secondary perils such as fire, floods, droughts and heatwaves had been the drivers for significant levels of claims in the first half of the year at a time when the North Atlantic hurricane season had been unusually benign.

The partial reason for the heatwaves highlighted how a single event had implications across the world. A larger amount of Saharan sand entered the atmosphere earlier this year and had been a factor in the heatwaves which hit Europe this summer. However, it had also been deposited in the North Atlantic which had reduced the likelihood of hurricanes forming in the early part of the 2022 season.

“We need to have a lot more forward thinking,” she explained. “We have to better understand the threats, and how they can evolve. It takes times to create new or adapt existing models.

“We have seen the growing need for models and data to be adapted. In the UK for instance the regulator’s requirements of stress testing for climate risks, which requires businesses to understand their exposure to these risks and to assess what that means for the future.”

Thomson added: “Risk will always be dynamic, and we will not have the whole answer. It is about constant stress testing of the models and the assumptions and look at how the future is likely to play out.”

She said the centre would not be focused purely on natural perils and will be looking at the broad range of risks which will test the market.

“There is a huge amount of research which is underway across the world and at the GRC we are keen to work with universities and research facilities to access the results of that work to build a better picture in a whole range of risks.

“It will support our clients in better understanding the risks, and we hope the data will also support the reinsurance process.”