1. ©2012 Risk Management Solutions, Inc.Confidential UP TO YOUR NECK THE SCIENTIFIC COMPONENTS OF RISK

2. The universal grammar of Catastrophe Modeling Hazard Stochastic Vulnerability 2ndary Modifiers Exposure Adjective Subject Verb (Adverb) Adjective Object The strong earthquake seriously damaged the unreinforced hotel

3. Exceedance Probability (EP) Output Annual Probability of Exceedence (%) Loss Amount 0 2 4 6 10 8 050M100M150M 200M250M300M 100 year loss = $131 million Integral is the AAL

4. © 2003 Risk Management Solutions, Inc. The topography of Risk - Residential Woodframe Loss Cost – Florida 0.00-0.05 0.05-0.1 0.1-0.3 0.3-0.5 0.5-0.7 0.7-1.0 % AAL

5. 5 Post-event loss amplification - In major Catastrophes loss does not occur in isolationStochastic Vulnerability Hazard Financial Loss $ Loss Claiming Total Event Impact Economic Context Political Context

6. What do proprietary Cat modellers do that is difficult? Manage teams of top ex-academic expert (egos), from a diverse range of fields, into a single coherent team Ensure consistency & calibration among all model elements Model compression and convergence Capture and output uncertainty High performance business computing environments Model maintenance: upgrades, bug fixes, servicing, 24/7 technical and software support Real time catastrophe response RMS has more than 100 scientist/engineer PhD modelers 6