Hamilton, November 4, 2018 - SL FINANCIAL an actuarial consulting and advisory firm is returning to Bermuda to play a major role during the 1/1/2019 reinsurance renewal, while expanding its service offering to catastrophe modeling.
In her book “Catastrophe Modeling: A New Approach to Managing Risk”, Patricia Grossi et al presents the key stakeholders in the management of risk (see figure):
A catastrophe models is employed to assess catastrophe risk and improve risk management decisions. The model output is quantified and presented in a way that is useful to stakeholders. Then, based on these metrics, alternate risk management strategies, such as mitigation, insurance, reinsurance and catastrophe bonds, can be assessed.
An important concern for (re)insurers is the concentration of risk (i.e. large number of properties in a single geographic area, therefore facing the possibility of large losses should a natural disaster occur in the area). Reinsurers and insurers often use diversification across several regions and risks to mitigate against concentration risk.
According to CEO Achille Sime, “Expanding our service offerings from working with all stakeholders involved in the management of risk in area of actuarial risk consulting and alternative risk financing to also include catastrophe risk modeling, constitute an application of diversification mitigating strategy applied to running a Small Business Enterprise (SBE).”