Emerging Risks Scenarios for Risk Management
Cambridge Centre for Risk Studies Seminar
In collaboration with
Date: Thursday 20 March 2014
Location: University of Cambridge Judge Business School, Trumpington Street, Cambridge CB2 1QA
Cambridge Centre for Risk Studies has a research theme dedicated to understanding and managing emerging risks.
Over the past several years this has entailed developing a taxonomy of emerging systemic risks, the compilation of a compendium of information about a selection of threats, and reviews of management strategies to deal with emerging risks. During the past year, a number of emerging risks have been explored through the development of extreme scenarios to use as stress tests in business risk management, for risks such as cyber catastrophe, pandemics, geopolitical conflicts and civil disorder. Risk Centre research examines the consequences of the scenarios in terms of types and levels of physical loss, the macroeconomic impacts, and potential effects on investment portfolios.
This seminar presented these and other scenarios and considered best practice for the business management of emerging risks. The seminar was attended by practitioners from a range of industries, policy-makers, and academics from a broad set of disciplines.
Download the meeting programme (pdf, 1.88MB)
Download the delegate list (pdf, 184KB)
|09:30||Welcome and Seminar Objectives
Professor Daniel Ralph, Academic Director, Centre for Risk Studies
Download the presentation slides (pdf, 883KB)
|09:45||Emerging Systemic Risks - Threats and Opportunities
Dr Andrew Coburn, Director of the External Advisory Board, Centre for Risk Studies
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|10:15||Scenario 1: A Geopolitical Conflict - 'China-Japan Conflict'
Subject Matter Specialist: Joshua Wallace, Cytora
Project Lead: Dr Gary Bowman, Research Associate, Centre for Risk Studies
Download the presentation slides (pdf, 3.81MB)
|11:30||Panel Discussion 1 - Good Practice for Managing Emerging Risks
Chair: Trevor Maynard, Head of Exposure Management and Reinsurance, Lloyds
Rowan Douglas Managing Director Willis Analytics, Willis
Dr Robert Muir-Wood, Chief Research Officer, RMS
John Scott, Chief Risk Officer, Zurich Global Corporate, Zurich Insurance Group
Dr Markus Wadé, Senior Risk Manager, Integrated Risk Management, Munich Re
Download the panel discussion notes (pdf, 203KB)
|13:30||Scenario 2: A Cyber Catastrophe - 'The Sybil Logic Bomb'
Subject Matter Specialist: Éireann Leverett, IOActive
Project Lead: Simon Ruffle, Director of Technology Research, Centre for Risk Studies
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|14:15||Ask the Audience
Professor Daniel Ralph, Academic Director, Centre for Risk Studies
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|14:45||Scenario 3: A Human Pandemic - 'Sao Paolo Virus Pandemic'
Subject Matter Specialist: Mary Chang, RMS
Project Lead: Dr Andrew Coburn, Director of the External Advisory Board, Centre for Risk Studies
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|16:00||Assessing the Macroeconomic Implications of Emerging Risks
Professor Gabriel Stein, Director, Asset Management Services, Oxford Economics
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|16:30||Panel Discussion 2 - Preparing for Emerging Risks
Chair: Alan Laubsch, Director & Head of Risk Products, Financial Networks Analytics
Jonathan Clark, Head of Business Solutions & Syndicate Claims Management and Member of SCOR Emerging Risks Groups for P&C claims, SCOR SE
Kay Haggis, Group Head of Operational Risk and Head of Catlin Emerging Risk Committee, Catlin
Matt Harrison, Syndicate Exposure Manager, Hiscox
Jeremy Hindle, Head of Enterprise Risk Aggregation, XL
Download the panel discussion notes (pdf, 211KB)
Many thanks to the attendees who provided their feedback, which is summarised below:
Download the attendee feedback summary (pdf, 123KB)
"Cassandras and catastronomics", Lloyds.com
25 March 2014
"The complex concept of 'catastronomics' - how diverse multi-trillion dollar catastrophic scenarios could impact the economy - was under the microscope at a University of Cambridge seminar earlier this month. Hosted by the Cambridge Centre for Risk Studies, risk professionals from insurance, academia and industry came together at the university's Judge Business School to examine the potential effect of certain unlikely but realistic scenarios ... "
Guest Speakers & Panellists
Professor Gabriel Stein
Director, Asset Management Services, Oxford Economics
Visiting Professor, Department of Economics, Royal Holloway University of London
Gabriel Stein graduated from the Stockholm School of Economics in 1980. Following a year in Israel, where he worked at the Israeli Ministry of Finance, he returned to Stockholm and set up his own economics research and public affairs consultancy, Stein Brothers.
In 1990 he moved to London, where he continued to run Stein Brothers for a year. A year later he joined Lombard Street Research to help set up that company's World Service, becoming a Director of the company in 1995. During more than 20 years as LSR Chief International Economist, he wrote and commented on all the major world economies.
From August 2012 to December 2013, Gabriel ran Stein Brothers (UK), a macroeconomic research consultancy. In January 2014, he joined Oxford Economics as Director, Asset Management Services. He is also Chief Economic Advisor to OMFIF (the Official Monetary and Financial Institutions Forum). As of 1 June 2013, he is a Visiting Professor in the Department of Economics at Royal Holloway University of London. He is a Senior Fellow of the Adam Smith Institute and a Non-resident Senior Fellow of the Chongyang Institute for Financial Studies at Renmin University of China.
Gabriel has written and commented extensively on topics such as the problems of monetary unions, demographics and pensions issues, broad money and credit flows and on sectoral financial balances. In 2005 he predicted that central bankers would lose their semi-divine status through failure to control asset-price bubbles, a forecast confirmed by the Great Recession of 2008-2010. He is a frequent speaker at international conferences and appears regularly on radio and television.
Gabriel has written Tänk Bakât (a short biography of Vilfredo Pareto), and a dictionary of financial terms both in Swedish) and two pamphlets for the think-tank Politeia. He has also written an historical novel which has received a number of kind letters of rejection; and he has an MA in Military History from the University of Buckingham.
Medical Research Analyst, RMS
Mary Chang MPH is the principle subject matter specialist on human pandemic risk, assisting the Cambridge Centre for Risk Studies with the development of the human pandemic scenario. Mary is a Medical Research Analyst in the LifeRisks team at RMS where she developed and manages the RMS Infectious Disease Model, used by life insurance companies to manage their risk of pandemic loss. Mary has a Master of Public Health from the School of Epidemiology and Public Health at Yale University and works at RMS headquarters in Newark, California, USA.
Senior Security Consultant, IOActive
Éireann Leverett is a cyber security specialist and works for IOActive in their world class Industrial Systems Security team. He advises clients on technology security. Éireann has been a key subject matter specialist on cyber risk, assisting the Cambridge Centre for Risk Studies with the development of the cyber catastrophe scenario. Éireann studied Artificial Intelligence and Software Engineering at Edinburgh University and went on to get his Masters in Advanced Computer Science at Cambridge. He studied under Frank Stajano and Jon Crowcroft in Cambridge's computer security group. In between he worked for GE Energy for five years and had an engagement with ABB in their corporate research department.
Joshua is a political scientist and co-founder of Cytora, providers of political risk analytics. A key subject matter specialist on geopolitical risk, he assists the Cambridge Centre for Risk Studies with the development of stress test scenarios for geopolitical conflict and social unrest. With a background in political science, management and IT consultancy and international development, Joshua is passionate about how new technologies can be applied to the world's most vexing problems. He co-founded Cytora, where he is head of research. His time in consultancy saw him advise some of the world's biggest companies such as GlaxoSmithKline while his development work has taken him to Ghana, Sierra Leone, Swaziland and India. Joshua has an MSc in Political Science from University College London and a BA in History from the University of Manchester.
Panel 1 - Strategy: What Approaches Should Businesses & Society Be Taking to the Threat of Emerging Risks?
Head of Exposure Management and Reinsurance, Lloyds
Trevor Maynard is Head of Exposure Management and Reinsurance at Lloyd's of London. He is responsible for monitoring reinsurance quality, aggregations of risk, catastrophe modelling and emerging risks. Trevor set up Lloyd's first formal emerging risks team in 2007 and has produced research on a wide variety of insurance relevant topics including: cyber risks, pandemics, climate change, behavioural risks, nanotechnology, space weather and food/water security. Trevor is a Director of the open catastrophe modelling framework - OASIS. Trevor is a Fellow of the UK Actuarial Profession and holds degrees in pure mathematics.
CEO, Capital, Science & Policy Practice and Chairman, Willis Research Network, Willis Group
Rowan leads the Capital, Science and Policy Practice at Willis Group. The Practice confronts large scale challenges of risk, resilience and sustainable growth at global and local scales through public, private and mutual mechanisms. Willis Group is an insurance and reinsurance broker with approximately 20,000 personnel operating in around 100 countries. Rowan is also Chairman of the Willis Research Network which he founded in 2006. The WRN has grown to become the world's largest collaboration between public science and the finance sector supporting around fifty universities and science institutions to support improved policy making and capital management.
Previously Rowan served as CEO Global Analytics of Willis Re and then across Willis Group. He began his career underwriter reinsurance with Syndicate 1095 at Lloyd's before founding the risk information company WIRE Limited in 1994 which was acquired by Willis Group in 2000.
Rowan has two public appointments in the UK serving on the Prime Minister's Council for Science and Technology and also the Natural Environment Research Council which oversees approximately $500m of annual environmental science expenditure. More widely he Chairs the United Nations International Strategy for Disaster Reduction Private and Financial Sector Working Group preparing the second UN Hyogo Framework for Action Agreement in 2015 and the World Meteorological Organisation Expert Advisory Group on Financial Risk Transfer preparing for the UN Agreement on Climate Services in 2015. He is also a member of the Political Champions for Disaster Reduction Committee chaired by the UNDP Secretary General and the UK Secretary of State of International Development.
He is a member of the Global Earthquake Model Foundation Governing Board, Pavia Italy; the Advisory Board of the Earth System Laboratory, NCAR, Boulder CO; and the Royal Society's Working Group on Human Resilience to Climate Change,due to report in late 2014. Rowan read Geography at Durham University (BA Hons), Geographical Sciences at the University of Bristol (MPhil), and is a Fellow of the Royal Geographical Society.
Dr Robert Muir-Wood
Chief Research Officer, RMS
Robert Muir-Wood is CRO of Science and Technology Research at RMS. In this role, Robert heads the branch of RMS responsible for enhancing approaches to natural catastrophe modelling and developing models for new areas of risk. Based in London, he has more than 20 years' experience in developing probabilistic catastrophe models and has most recently focused on the clustering of catastrophic events and the potential for M9 earthquakes as well as the expansion of catastrophe modelling to support non-insurance related applications around disaster risk reduction. Robert was lead author on Insurance, Finance, and Climate Change for the 2007 Intergovernmental Panel on Climate Change (IPCC) Assessment Report, and is the author of six books, as well as numerous papers and articles in scientific and industry publications. Robert has recently focused on new models for clustering, time varying activity rates, loss amplification and Super Cats. He is also a member of the OECD High Level Advisory Board of the International Network on Financial Management of Large-Scale Catastrophes. He holds a first class degree in natural sciences and a PhD in Earth Sciences, both from the University of Cambridge, and was a junior research fellow at Trinity Hall, Cambridge.
Chief Risk Officer, Zurich Global Corporate, Zurich Insurance Group
John Scott is Chief Risk Officer for Zurich Global Corporate. He joined Zurich in 2001 becoming Head of Risk Insight in 2007 and took on his current role in 2009. John leads the global, regional and local implementation of the Group's enterprise risk management strategy across Global Corporate. A graduate of Oxford University, with a PhD in geology, John's early career was in the upstream oil and gas industry, where he gained wide-ranging international experience with BP. In 1995 he gained his MBA at Cranfield and joined BOC, as a key member of the Group Strategy & Planning team, and then later became General Manager of BOC's Edwards business division. John is a member of the Institute of Directors in the UK and currently chairs the CCSA (Carbon Capture and Storage Association) group on risk.
Dr Markus Wadé
Senior Risk Manager, Integrated Risk Management, Munich Re
Markus Wadé has been a senior risk manager in Munich Re's Integrated Risk Management division for the last four years. Within the Group Accumulation and Emerging Risks team, he is responsible for the development of accumulation scenarios for Munich Re's global business operations and the refinement of risk identification tools and methods. Special focus of his work is currently the analysis of complex accumulations of risks. Before joining Munich Re Markus was working for about 10 years in quantitative credit risk management in various financial institutions. His responsibilities included the development and implementation of rating and LGD models and their Basle II audits. Markus holds a PhD for a thesis about the estimation of country risks for credit portfolio models. He studied economics at the University of Regensburg and Wesleyan University (USA).
Panel 2 - Response: How Should a Business Monitor Emerging Risks & Manage Their Occurrence?
Director and Head of Risk Products, Financial Networks Analytics
Alan Laubsch has over 20 years of risk management experience and has advised global banks, asset managers, and sovereigns on enterprise risk management.
As a co-founder of the RiskMetrics Group, Mr Laubsch ran the RiskMetrics Labs division in Asia. His research focused on next generation risk management practices, including methodologies for early warning, stress testing, systemic risk, and a framework for integrated risk management.
Alan Laubsch joined FNA in 2013 as head of Risk Products, which includes the HeavyTails systemic risk monitor. Previously, Mr Laubsch was a vice president at JPMorgan's Risk Advisory Group, where he helped financial institutions implement enterprise risk management in Latin America, Middle East and Asia. Mr Laubsch joined JPMorgan in New York in 1993 after receiving a BS in Industrial Engineering from Stanford University. As a researcher in the Corporate Risk Management Group, Mr Laubsch worked on hedge fund risk analysis, default risk modeling, economic capital allocation and market and credit risk integration.
Mr Laubsch authored Risk Management: A Practical Guide and research at RiskMetrics. Mr Laubsch has also published articles in the Asia Wall Street Journal and other financial media.
Head of Business Solutions & Syndicate Claims Management and Member of SCOR Emerging Risks Groups for P&C Claims, SCOR SE
Jonathan joined SCOR in January 2013 to head SCOR's London-based Business Solutions claims team and to be responsible for the Claims Management of the Channel Syndicate. A claims professional for over 30 years, Jonathan has held international executive positions with Crawford and Cunningham. He was claims director at the Financial Services Compensation Scheme from 2007 to 2009. As a practicing loss adjuster his professional work has focussed on financial losses particularly those arising from contractual liabilities in manufacturing industries. He has dealt with claims in over 40 countries and also lectured on the investigation and management of business interruption and product liability claims particularly in industrial processing, life sciences and chemical industries. Jonathan is a graduate in biochemistry and biochemical engineering from Oxford and London Universities. A Chartered Loss Adjuster and Chartered Insurer, he is a past Chair of the Faculty of Claims and current President of the London Business Interruption Association.
Group Head of Operational Risk and Head of Catlin Emerging Risk Committee for Operational Risk, Catlin
Kay is the Group Head of Operational Risk at Catlin Group, an international specialty insurer and reinsurer. Kay has over 30 years' experience of operational risk and insurance and has held several senior positions in the financial industry, leading global teams, including Royal Bank of Scotland where she was Head of Operational Risk and overall Group Head of Business Continuity, Direct Line, Barclays Bank, The Woolwich and Aviva.
Syndicate Exposure Manager, Hiscox
Matt is the Syndicate Exposure Manager for Hiscox Syndicates. Amongst other duties, he is responsible for the Catastrophe Modelling and Exposure Management of the Insurance business written by the Syndicate and the Group wide clash models. These Clash models are designed to explicitly parameterise the Groups exposure to correlating, but non-Cat modelled, risks and therefore include emerging risks.
Matt holds a PhD in Physics.
Head of Enterprise Risk Aggregation, XL
Jeremy Hindle, Head of Enterprise Risk Aggregation for XL Group, is responsible for managing day-to-day reporting of catastrophe risk, with audiences as diverse as rating agencies, regulators, XL's 50 businesses as well as the Board of Directors. As owner of the Internal Catastrophe Risk Model, he leads the Enterprise Catastrophe Risk Practice group, which oversees selection, blending, and usage of cat models across XL that are used for capital management, ORSA and Solvency II reporting. In addition, he is leading the development of new systems and tools to collect, aggregate, analyse and report on "Non-CAT" clashing risks, providing transparency into XL's key risk accumulations across insurance, reinsurance and investments.
Prior to this role, he was Ceded Reinsurance & Underwriting Risk Manager for XL Re, responsible for managing the risk profile of the business for both catastrophe and non-catastrophe risks and the placement of all Group retrocession for Aviation, Casualty, Marine and Property business. Previously he had spent over 20 years as an underwriter, mainly focused on property reinsurance responsible for International business. This included positions as Director of Property for XL Re Europe (previously Le Mans Re) in Paris, Senior Vice-President, International Underwriter at XL Re Ltd (previously Mid Ocean Re) in Bermuda, having started his career at Swiss Re (UK) Ltd in London, culminating with a position as Senior Underwriter.
He has a keen interest in natural and man-made disasters and emerging risks. He was part of the original group that launched the Risk Prediction Initiative in Bermuda in 1994, that continues to fund academic research relevant to the insurance industry, including sponsoring paleoclimatological techniques that enable scientists to extend historical datasets to thousands of years to provide a better understanding of the trends in tropical cyclone activity.
Emerging Risks Scenarios for Risk Management
Photos from the Centre for Risk Studies seminar, held at Cambridge Judge Business School on 20 March 2014, are available via Flickr.