Like many people, Karen Clark’s career was influenced by circumstances and serendipity rather than any advanced planning. When in graduate school she developed a love of building computer models, leading to her first job in the research department of Commercial Union Assurance.

Executive Summary

This article about Karen Clark's successful career, and how she advocated for her game-changing idea of catastrophe modeling, is part of a special tribute to women in the insurance industry put together by Loretta Worters of the Insurance Information Institute, published with permission. A video of her interview with Clark is available on the I.I.I. website. Last year, Worters interviewed two other successful women in insurance, Barbara Bufkin and Linda Goldstein.

“One of my first assignments was to figure out if the insurer had too much coastal exposure because they had been growing pretty rapidly along the coastline,” said Clark. “I loved my job, but the company had some financial difficulties, and the research department was eliminated. I was offered and took another position in an actuarial department, but it wasn’t a great fit. And I had this growing passion for building a hurricane model. So, I kept researching this area on my own time, on weekends and evenings.”

That research ultimately led Clark to write her seminal paper, “A Formal Approach to Catastrophe Risk Assessment and Management,” published in the Casualty Actuarial Society Proceedings, in which she argued for probabilistic models rather than the subjective rules of thumb then used in underwriting.

“Catastrophe modeling was a game-changer for the insurance industry because it introduced a whole new way of understanding and managing risk,” Clark explained. “We don’t just look at worst-case scenarios, but we develop a probability distribution of potential outcomes. What are the chances of a $1 billion versus a $10 billion hurricane loss?”

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