Posted on 23 Apr 2013 by Neilson
Global professional services company Towers Watson has introduced new predictive modeling software designed to assess terrorism risk. The company unveiled its Sunstone product during a launch event at the RIMS 2013 Annual Conference in Los Angeles. The product provides both insurers and non-insurers with a better understanding of their terrorism risk exposure, and reflects the nuances in the changing face of terrorism and political violence threats.
Sunstone, named after an instrument to locate the sun in an overcast sky, was conceived to bring clarity and transparency to the challenging arena of terrorism analytics. It is underpinned by analyses of events of all scales and types, and the potential impacts generated on an organization's employee well-being and financial health. The consideration of comparatively small attacks, as well as macro events, allows businesses to gain a more precise understanding of their short- and medium-term exposure volatility, as well as the potential for longer term losses.
"The majority of terrorism risk products were conceived in response to 9/11," said Paul Bassett, managing director of the Crisis Management group at Towers Watson. "Sunstone is the first major entry to the market in some time - it is a significant step forward."
While insurers that underwrite terrorism cover are expected to be the prime users of such models, analyses could be applied equally to a range of exposures to meet the needs of the full range of businesses. These include property portfolios, risks to employees, workers compensation, and treaty or facultative (re)insurance. From such investigations, companies would be able to model assessments such as probable maximum loss, specific event loss, exposure concentrations and marginal impacts.
Towers Watson Sunstone can predict a broad range of attack types, enabling a better reflection of potential exposures to events in developing countries that might be situated anywhere on the terrorism and political violence spectrum.
"There is recognition that, understandably, after 9/11, there was a focus on large-scale urban jihadi terrorism. However, many of the larger claims in this class in the last five years have actually come from emerging market areas like North Africa or Southeast Asia, and from events that sit more at the political violence end of the spectrum," said Bassett.
Sunstone allows users to adjust threat-weighting inputs according to the sensitivity of specific types of attack, the geographic balance of a company's operations and its broader risk appetite. Cost-severity factors can also be varied for analyses of life and workers compensation portfolios.
"Our focus has been on creating a product that considers the broad scope of both known and emerging threats, and reflects the complex and changing nature of global terrorism for a wide range of clients," said Chris Holt, Crisis Management consulting director, who led the model development team. "Our terrorism experts have considered the evolving nature of the threat and with the support of catastrophe modelers, have projected this into a range of attack and target types that might be anticipated in years to come."
Users will be able to access the Sunstone product either as a consultancy service or by licensing the software.