building resilience to property risks arising from extreme weather 11 july 2013 caroline woolley...

Building resilience to property risks arising from extreme weather

11 July 2013

Caroline WoolleyMarsh

Martin Townsend

BRE Global

David Wilkes

ARUP

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Building resilience to property risks arising from extreme weatherAgenda

• Panel presentations and discussion:– Caroline Woolley – Risk and Property Practice Leader, Marsh.– Martin Townsend – Director BREEAM, BRE Global.– David Wilkes – Associate Director, ARUP.

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Building resilience to property risks arising from extreme weatherIntroduction

• Natural catastrophe (NAT CAT) risk and the tools to tackle it:– NAT CAT landscape.– Narrow the gap between total and insured losses.– NAT CAT risk management best practice.

• Making cities resilient.

• Property sustainability.

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Natural catastrophesIncreased frequency and severity

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Natural catastrophesSignificant insured losses – 2011 to Q4 2012

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Natural catastrophesNarrow the gap

• Insured versus uninsured losses (source: Munich Re, 2013):

– Katrina (2005) – Insured loss USD62.2 billion. Total loss USD125 billion.

– Japan (2011) – Insured loss USD40 billion. Total loss USD210 billion.

– Thailand (2011) – Insured loss USD16 billion. Total loss USD43 billion.

– Sandy (2012) – Insured loss USD30 billion. Total loss USD65 billion.

– In US, 64% of total losses are insured.

– In Europe, only 16% of total losses are insured.

• Reasons include:

– Exclusions (Japan).

– No insurance.

– Unavailable insurance.

– Restricted insurance.

– No reinsurance.

– Underinsurance.

– Emerging risks.

– Claims disputes.

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NAT CAT risk managementNAT CAT Pack

• Our view of best practice in relation to natural catastrophe risk management and transfer.

• Approach:

• Risk identification.

• Risk measurement.

• Risk improvements.

• Risk treatment.

• Full spectrum from data collection, to business continuity management, through to claims.

• Includes property sustainability and resilience.

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NAT CAT risk managementSpectrum

• NAT CAT Risk Map.

• Natural hazards and catastrophe modelling.

• Supply chain risk management.

• Business continuity management.

• Business interruption insurance reviews.

• Updates – Guy Carpenter CAT Central.

• Placement, including Bowring Marsh: Global Property.

• Insurance claims preparation.

• Property sustainability – green buildings.

• UNISDR.

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Natural catastrophesNAT CAT approachModelling process own locations:

• NAT CAT Risk Map Package – Complete overview to identify exposures. NAT CAT zoning for all locations, using CS Stars technology and the NATHAN1 database.

• Vulnerability – The extent of damage to property at a given event intensity. How robust are your assets?

• NAT CAT modelling – Modelling of specific locations using AIR/RMS2 – likelihood of events to establish loss estimates and limits.

• Risk financing – What proportion of the loss is retained by the company and what proportion is (or should be) insured?

Supply chain:– NAT CAT Risk Map Package – Review of

risk for key suppliers’ NAT CAT zoning information.

1NATHAN: Natural Hazards Assessment Network 2AIR/RMS: AIR Worldwide/Risk Management Solutions

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Making cities resilientHow you could help

• City member

Becoming resilient.

Contributions to community.

Business Emergency Response Group (BERG) – part of Business in the Community (BITC), a Prince’s Trust charity.

Partner of the UNISDR, supporting the “Making Cities Resilient” campaign.

• City adviser

Risk management.

Insurance expertise.

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Property sustainability

• Main categories:

– New build.

– Retrofit.

– Rebuild after a loss.

• Importance of insurance funds in recovery after a NAT CAT event.

• Rebuild in an environmentally friendly and robust way, and insurers pay.

• Green building and resilient repairs clauses.

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GRAPHICS NO: 12-0205

David Wilkes - Arup

“Building” Resilience into InfrastructureRisks Arising from Extreme Weather

14 David Wilkes – Former manager – Resistant Infrastructure

15 People and Propert

16

Definitions • Resistance

Designing to exclude, or protect against design hazards

so that normal operation can continue

• Resilience

Designing, or adapting so permanent damage is

avoided, structural integrity maintained,

normality resumed as quickly as possible

17

UK CPNI, UK Govt.those essential facilities systems, sites and networks…upon which daily life depends.

The sectors that are considered to deliver ‘essential’ services are:

•Food•Water•Government•Finance•Health•Emergency Services•Transport•Communications•Energy

Building Resilience into Infrastructure

18 Building Resilience into Infrastructure

Food

19 Building Resilience into Infrastructure

Water

20 Building Resilience into Infrastructure

Government

21 Building Resilience into Infrastructure

Finance

22 Building Resilience into Infrastructure

Health

23 Building Resilience into Infrastructure

Emergency services

24 Building Resilience into Infrastructure

Transport

25 Building Resilience into Infrastructure

Communications

26 Other Urban Resilience Definitions

27

28 Natural Disasters

29

30 Hunters Point New York - Resilience

31 NYS2100 – Post Sandy Building retrofit

32

Thank - You

• Any Questions?

• david.wilkes@arup.com

Thank you for listening

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NAT CAT Risk Map

• Latest addition to the NAT CAT Pack.

• Collaboration with CS Stars using Risk Goggles.

• First step – overview of all exposures.

• This is an interactive map of clients complete portfolio of assets, including suppliers’ locations where appropriate. From a single view you can see all you property risk data, and now this includes NAT CAT hazard exposures.

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Supply chain risk management

• Damage and non damage.

• Traditional property damage/business interruption (PD/BI) policies:

– Extension clauses.

– Damage only.

– First tier only.

– Restrictions.

• Supply chain cover:

– Non-damage BI/supply chain policy development.

– Zurich, AIG, Munich Re and Allianz.

– Supply chain assessments.

– Captive approach.