Professor David Stephenson, director of the Exeter Climate Systems research centre at the University of Exeter gave a seminar on modelling weather and climate-related risks. His presentation is now available for download here (4.8MB pdf)

Abstract

Some grand as-yet-unresolved challenges in modelling hydrometeorological hazards include:

• How best to represent non-stationary rates that vary on all time scales;
• How to account for clustering of events which lead to large aggregate losses;
• How to model the dependency between the number and intensity of hazards which has a large impact on aggregate losses (collective risk);
• How to deal with imperfect data sources: short observational records, inhomogeneities, climate model errors, etc.

This talk will attempt to cover some of these issues relevant to storm and flood risk by illustrating the issues on extra-tropical storms. Recent scientific work on clustering and dependency will be reviewed that have important implications for how the insurance industry calculates financial losses due to such events.