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The Willis Research Network Newsletter




Issue No. 10 – 2019 Q2



Welcome to our first quarterly Willis Research Network (WRN) newsletter in 2019 for an insight into our latest research and activities.


In our northern hemisphere, spring has sprung; for our readers in the southern hemisphere, autumn/fall is under way with promising harvests. Either way, this is a reminder that we reap what we sow, and that getting results requires patience and continuous encouragement: in gardening and in research!


Like keen gardeners, we proudly present to you some of the blooming WRN partnerships, whether they are long-standing or recent WRN members: you can get a taster in this newsletter but please do watch out for forthcoming seminars and webinars.


In recognition of our widening research agenda and readership, we retained a variety of topics, without sacrificing the depth of commentary. Hopefully you can cherry-pick and find something of interest!



As always, please contact us for any feedback or queries.


Kind regards,


Hélène Galy
Willis Research Network Director





Contents



Natural catastrophe & climate risks


  • Spring brings new climate risk assessment toolkit
  • Thunderstorm season in full swing in the US
  • Is high-rise buildings vulnerability underestimated for successive hazards?
  • Precompetitive collaborations & finding new research talents

Geopolitical drivers of risk


  • Geopolitical risks – a board level concern
  • A new concept: Deterrence by Resilience to Secure Societies
  • Hand-picked Cybersecurity conferences
  • Natural Resources Power & Renewal Energy Market Review

Events and Communications


  • Upcoming Events
  • Latest Blogs
  • Contact Information




Natural catastrophe & climate risks



Spring brings new climate risk assessment toolkit


Mark Carney (Bank of England) on #climatechange: “Financial policymakers will not drive the transition to a low-carbon economy. Governments will establish the frameworks, and the private sector will make the investments.”


New tools are arising to help companies understand and manage their exposure to climate change. ClimateWise recently released two reports, which suggest frameworks for understanding and disclosing climate-related risks.


  • The Physical Risk Framework is a practical guide for investors and lenders based on natural catastrophe models to aid understanding of the changing physical risks of climate change and the impacts on portfolios.
  • The Transition Risk Framework provides an open-source, step-by-step methodology on how to assess asset types exposed to transition risk, capture emerging opportunities from the low carbon transition and incorporate these into financial models.

Willis Towers Watson (a ClimateWise member), contributed to the design of this framework with representatives from across the industry, in a pre-competitive mode. We have been applying this approach to help our clients address their requirements for the Task Force on Climate-related Financial Disclosures. Here is an example of how we can help organisations be more resilient.



New datasets (e.g. Met Office UKCP18), provide more granularity on the impacts of climate change on a spatial scale relevant to portfolio managers, and a temporal scale relevant for business continuity, supply change management, strategic planning and investment. This could hail an increase in commercial offerings in this space.


The WRN is leveraging expertise from our academics and research managers to advise clients on their climate change risks, both physical impact (e.g. changing intensity and frequency of extreme natural hazards) and transition risk (risks and opportunities involved with a change to a zero-carbon economy). The WRN also allows direct access to leading experts in atmospheric and climate science, to provide credible, transparent and robust advice for our clients.





Thunderstorm season in full swing in the US


Spring is an interesting time for those watching the weather. The warmth comes back to the ground as the days lengthen, and the weather patterns change as jet streams move to their summer positions nearer the poles. One type of extreme weather that makes a return is severe convective storm (SCS) activity – thunderstorms. In the U.S. Midwest and Southern States, we see an annual increase in hail and tornados in the Spring, which drive high losses when they affect built up areas or vulnerable agricultural areas. In 2018, damage from severe (>$1bn economic loss) SCS activity totalled close to $12bn (NOAA). Our WRN partnership with Columbia University, focusses on long range forecasting of severe convective systems up to a month ahead, via a Hail Environmental Index (HEI) and a Tornado Environmental Index (TEI). These indices are used in Willis Re client services, by advising on the potential impacts to client portfolios of SCS over the month ahead, most importantly, highlighting when there is an enhanced risk of hail or tornado damage. Building on past work related to the variability and impacts of SCS (found in full here and short article here), current research aims to extend the forecasting capability to Canada to refine the TEI forecasts for different intensities, as the larger EF 4-5 events create the most damage.





Is high-rise buildings vulnerability underestimated for successive hazards?


Recent studies show that certain high-rise buildings exposed to wind-induced fatigue have the potential of developing cracks, which might make them more vulnerable to subsequent moderate to severe earthquakes. The WRN is working with Dr. Carmine Galasso and PhD candidate Biao Song, UCL EPI Centre. They aim to develop a probabilistic framework for fracture risk assessment of high-rise buildings subjected to successive yet uncorrelated hazards, such as wind followed by earthquake, or earthquake followed by tsunami. Some preliminary results show that wind-induced fatigue is not strong enough to generate failure of structure, but it may increase the fracture risk of high rise buildings subjected to a subsequent earthquake. If this proves true, it might have implications for wind and seismic risk assessment. Additionally, the project will also lay the foundations for creating a wind vulnerability database, to more competently judge and score vulnerability modules of catastrophe models – this will ultimately help with developing further our Willis Re View of Risk.





Precompetitive collaborations & finding new research talents

Alongside our contribution to ClimateWise, our WRN partners have also been contributing to events led by our Willis Re teams on both sides of the Atlantic.


  • In January, Professor Chris Kilsby from the University of Newcastle joined our regular Flood Club event hosted at the Willis Towers Watson London Office. Representatives from across the (re)insurance sector attended to discuss two key challenges with assessing and managing flood risk:
    • Using Earth observation for flood risk assessment: data is improving but access and pricing are still a challenge.
    • The impact of climate change on extreme flood events: guest presenters acknowledged uncertainties in this field, and suggested approaches to adapt current models.

    You can find more details on these discussions in this blog.

  • Dr. James Done at the National Centre for Atmospheric Research (NCAR) presented on Tropical Cyclone risk at the latest Reinsurance Association of America's Catastrophe Modelling conference in Orlando, Florida.
  • Keen to help in developing new talent and awareness of the risk industry, Willis Towers Watson also participated in the University of Bath's recent Samba event, run by the School of Mathematics: an opportunity for a cohort of PhD students to work on real life industry problems put forward by partner organisations. This kind of event can lead to ongoing relationships and ideas that sometimes turn in to research projects within the WRN portfolio.
  • We also continue to support applied research projects through the range of Doctoral Training Programme across the U.K. This enables us to engage with new up-and-coming scientists on topics such as:
    • Mapping of flood hazard and risk in small islands developing states using emerging high-resolution digital elevation models.
    • Intensification of short-duration rainfall extremes and implications for flash flood risks.




Geopolitical drivers of risk


Geopolitical risks – a board level concern


The Willis Towers Watson Geopolitical Risk initiative launched its new website. The WRN continues to play a major role in the initiative, providing insights from our natural catastrophe, threats and security research. WRN is also participating in key client-facing advisory activities, and client seminars and is engaging across the public and private sectors to help inform this increasingly important work.


Check out this website for more insights into the interconnected geopolitical drivers of risk and how to manage them.




Recent blogs posted here include:






A new concept: Deterrence by Resilience to Secure Societies


The WRN has joined the Royal United Services Institute’s (RUSI) 4-year long Modern Deterrence Programme. The Programme investigates the changing and increasing threats to societies, with adversaries targeting all parts of business and society, and the need for deterrence to involve not just governments, but also the private sector and civic organisations. The programme also showcases how through organisation, communication and education, there is the opportunity to generate a more sustainable and resilient society, better prepared for the prevailing threats of today and tomorrow.


Participants to this centre of excellence will benefit from research findings and from sharing best practice. RUSI’s unique access to policy-makers and senior personnel across the security domain throughout the world will lead to a robust, evidence-based recommendations, relevant to policy makers and corporates. This supports Willis Towers Watson’s advisory services on geopolitical drivers of risk and the assistance that can be given to improving business performance and resilience.


Alastair Swift, Head of Corporate Risk & Broking GB, Willis Towers Watson, commented: “Our clients increasingly see geopolitical instability as a key risk driver for business. There are immediate synergies between the two organisations, particularly on the need to better understand geopolitical drivers of risk, and the focus on actionable recommendations to increase resilience. By engaging with RUSI to understand global volatility, leveraging the rest of our Willis Research Network top class data and analytics, and combining this with our internal expertise, we are able to provide bespoke geopolitical risk mitigation strategies for our clients.”


Elisabeth Braw, who leads the programme, welcomed our contribution, unique in the insurance sector: “We are very pleased that Willis Towers Watson is becoming involved as an early supporter. Their engagement is an exemplary illustration of the fact that today national security involves not just armed forces and governments but the private sector as well.”





Hand-picked Cybersecurity conferences


Cyber is a new WRN research stream, and we attended several cyber-related events recently. In January, our research partners at the Cambridge Centre for Risk Studies (Andrew Coburn, Eireann Leverett) launched a book: 'Solving Cyber Risk: Protecting Your Company and Society', which provides a comprehensive overview of the cyber domain using a risk-focused lens. We are working on a full review.


In February the Cyber 9/12 U.K. student policymaking challenge took place in the BT Tower, with WRN represented on the organising committee, and Willis Towers Watson representation on the judging panels. The event was hugely successful, rewarding participating students with a rich learning experience in responding to a scenario involving critical national infrastructure and drawing acclaim from senior government and industry stakeholders for its tangible contribution to the cyber skills pipeline. The 2020 edition of Cyber 9/12 UK is set to build on these strengths with even closer Willis Towers Watson engagement.


The SC Congress provided a day of insightful industry-focused talks. Highlights included a keynote showcasing the Bank of England's success at building cyber culture in their organisation, emphasising the effectiveness of rewards rather than punishments in motivation security-conscious employee behaviour. This is consistent with the approach promoted by Willis Towers Watson, e.g. via our Cyber Risk Culture Survey.




Our Cyber Risk Solutions team use these WRN insights in their client advisory services.





Natural Resources Power & Renewal Energy Market Review


The Willis Towers Watson Natural Resources team launched their annual Power and Renewable Energy Market Review in January as well as the Energy Market Review 2019 – Adjusting to change this April. The WRN contributed in two ways:


  • Climate change: Large scale and rapid transformation of the global carbon-intensive energy system is required to avoid the worst impacts of global warming. How the power industry can adapt and survive in a sustainable way is a challenge for decades and multiple generations. We drew on our internal expertise and research from WRN partners to show that industry is facing an unprecedented disruption from global warming, and highlight the changing risks, and opportunities, to come.
  • Key geopolitical drivers: a changing regulatory landscape, supply chain risk, workforce availability – we also suggested that a holistic approach is the most effective way to understand and manage these risks.

The WRN continues to engage with the Natural Resources team to deliver insight into these global markets and support our client advisory services.





Upcoming Events




Willis Research Network Earthquake Seminar – 9 May 2019


The event follows from our seminar in 2017 and will address key earthquake related questions:

  • Using 3D simulation to reduce the uncertainty in loss estimates: A Reinsurance, Capital and Regulatory challenge in US and Canada: a $30bn to $300bn Pacific North-West / British Columbia range of industry PML estimates – which to trust?
  • The odd couple – aftershocks and clustering - How can we adjust or build models to account for these coupled events? We present potential benefits, also implications to reinsurance and capital requirements using recent events in Alaska, New Zealand and Mexico as examples.
  • Reducing gaps in model coverage and informing model validation – How Willis Re is leveraging Global Earthquake Model data and models?

A number of experts on earthquake risk will join us: Dr Ross Stein (Temblor), Dr Marco Pagani (GEM), Tim Edwards (Willis Re), Grant Baxter (Willis Re), Dr Myrto Papaspiliou (Willis Re) and Dr Crescenzo Petrone (Willis Re), are amongst the speakers expected on the day.


EGU General Assembly 2019

7-12 April 2019, Vienna, Austria.
WRN will make several contributions, in particular on Global Tropical Cyclone Wind Footprints, and how catastrophe modelling is assessing and communicating climate change impacts.


CYBERUK

24-25 April 2019, Glasgow, UK
The UK government's flagship cyber security event, attended by senior leaders from public sector, industry, and academia. WRN will be attending.


Modern Deterrence Conference, RUSI, 2019

29 May 2019,London, UK


Oasis Conference 2019

18-19 June 2019, London, UK
Willis Re will be presenting on climate change in the (re)insurance industry.


Cambridge Centre for Risk Studies - 10th Anniversary Risk Summit

20 - 21 June 2019, Cambridge, UK





Latest Blogs






For more information…


… on any of the research above or other WRN projects, please get in touch with our team or visit our website.


Subscribe to our Newsletters


Upcoming Events


Willis Research Network Spring Seismic Seminar
13th February 2019, London, U.K.

More Details To Follow


SC Congress London
21th February 2019, London, U.K.


Recent Events


Volcanic Ash Cloud & Airlines
20th September 2018, Reykjavik, Iceland


Climate Change: Risk an Opportunity in Real Estate
31st October 2018, London, U.K.


Willis Research Network Autumn Seminar
6thNovember 2018, London, U.K.


EEFIT-TDMRC Reconnaissance of Sulawesi Earthquake and Tsunami
17th December 2018, London, U.K.


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