In her article, “Why Open Platforms are the Logical Next Step for Catastrophe Risk Models,” risk expert Karen Clark explains that an open platform starts with “reference” models for combinations of peril and region.
“All of the components of the reference models are fully transparent and accessible by the user,” she writes, referring to her own company’s open platform, RiskInsight, which comes with reference models that can be used “as is” or efficiently customized with built-in tools, such as WindfieldBuilder and DamageRatesManager.
How do WindfieldBuilder and DamageRatesManager work?
Clark provides the following explanation:
As the name suggests, WindfieldBuilder allows insurers and reinsurers to create realistic windfields for storms of their own creation for risk and capital modeling purposes (as well as tracks of actual storms for real-time claims estimation).
WindfieldBuilder is a tool that allows users to customize reference models for tropical cyclones by modifying the path of a storm, dialing the speed of the wind up or down, and revising other storm parameters.
Reference models are complete catastrophe models with the usual components:
Like WindfieldBuilder, which is a tool to customize the hazard component of a hurricane reference model, DamageRatesManager is a tool to customize damage functions of region peril reference models. Users can adjust the mean damage rates by intensity (wind speed for hurricanes and ground motion for earthquakes) for different occupancy and construction classes and can even define their own damage curves by location.