Catastrophe Risk Assessment and Management: Developing Risk Models for the Insurance Industry
During the past 15 years, there has been spectacular growth in the use of risk analysis and management tools, developed by engineers, in the ﬁ nancial and insurance sectors. In particular, the insurance, reinsurance and investment banking sectors have enthusiastically adopted loss estimation tools developed by engineers in evolving their business strategies and to manage their ﬁ nancial risks. As a result, insurance/reinsurance strategies have evolved as a major risk mitigation tool in managing catastrophe risk at the individual, corporate and government levels. Th is is particularly true in developed countries such as the US, Japan and countries of western Europe. Unfortunately, it has not received adequate attention in developing countries, where such a strategy for risk management is most needed.