Natural catastrophe (CAT) loss models are decision support systems used extensively within (re)insurance to assist in pricing natural hazard risk and aggregate exposure management. These are complex, probabilistic models that comprise a hazard, vulnerability and financial module to calculate $ losses on a portfolio of physical assets.
Three decades of development, now climate-enabled
Since 1994, Risk Frontiers has been developing best-in-class CAT models for the global (re)insurance industry, for all the major loss-producing perils in Australia – Flood, Fire, Cyclone, Hail and Earthquake.
Since 2019, our extreme weather CAT models (Flood, Fire, Hail and Cyclone) are ‘climate-enabled’. This means we can undertake detailed financial loss modelling at the address level for present day (baseline) and a range of future climate scenarios.
Our CAT models have played a crucial role in helping clients across banking, financial services, government, energy and telecommunications understand the materiality of physical climate risk to their business.
Why use CAT models to measure climate risk?
The Geneva Association, and the UK, French and Australian Prudential Regulation Authorities have all identified CAT models as a critical tool to help improve the understanding of financial impacts of physical climate risk.
CAT models have two major advantages over the metric-based climate risk approach – they have been dealing with the ‘problem’ of measuring the financial impacts of extreme weather (tail risk) for several decades, and they include asset vulnerability and exposure aspects into estimates of financial loss.
Experts in climate risk
Our staff are experts in climate risk. We are long-term partners of the Australian Research Council Centre of Excellence for Climate Extremes (CLEX) and contributors to the Climate Measurement Standards Initiative (CMSI).
Our CAT models can be executed on our side as part of a physical climate risk assessment or licenced through our Multi-Peril Workbench software. For more information, contact: