This is a ground breaking and essential book. For the last quarter of a century, some of us have witnessed the birth and development of a new, profound and integrating professional and scientific discipline called catastrophe risk modelling. It has transformed the quality of insurance protection upon which more than a billion people depend for their security, and reformed an industry from relative ruin in the early 1990s to relative resilience just two decades later, in spite of a sharp increase in natural hazard risk over that time.

And yet, despite this significance, the discipline is barely known outside its own circles. It is difficult to estimate, but perhaps just 25,000 people worldwide are active members of the ‘cat modeling’ community among insurers, reinsurers, regulators, modeling providers, and related communities across academia, engineering and civil protection.

I entered this domain in 2005 and, like everyone, learnt about this field through professional courses, experience, the wisdom of colleagues and reports and articles dealing with specific issues. There was no consolidated text that brought this world together. Meanwhile sensing the wider significance of these methods, there was nowhere to point the curious non-insurer when asked to recommend a comprehensive guide to the field. I am grateful that we now have one, and delighted that many of those who shone a light for me ten years ago have come together with others to share their knowledge and experience for all.

The authors and contributors are to be congratulated, not just for producing the first detailed reference on catastrophe modeling, but also for creating the framing of a new discipline. It is path-breaking and one can only imagine the length of internal debates on so many defining points and fundamental issues. This breakthrough will, I hope, spur many other books and publications to support the expansion and further deepening of the field.

Most of us work in specific areas and this text will be useful to experienced practitioners, to connect with wider aspects of the discipline, as well as essential reading for newer professionals. I am also excited that it will open up the field to many others across industry, science, NGOs and public policy, far beyond insurance, who can build on it, apply it and even criticize it as part of a wider, shared, endeavour to better understand, reduce and manage climate and natural hazard risks and protect the under-protected.

As we consider how to implement the UN Global Goals on climate risk and other natural hazards, catastrophe modelling will guide the changes needed to save millions of lives and livelihoods among exposed populations in the decades ahead. This book, and its future editions, will play a leading role in that journey.

Rowan Douglas CBE

CEO Capital Science & Policy Practice, Willis Towers Watson
Member, Prime Minister's Council for Science & Technology

We, the main authors, wish to expressly thank the other authors and reviewers who have contributed to this book and made it possible. Catastrophe risk management and modelling is a discipline that draws upon a wide range of knowledge and expertise, so we could not have created a credible practitioner's guide without the widespread support that we have received from the catastrophe modelling community.

Each main author had oversight of one of the main chapters (i.e. 2–5), and sculpted it as appropriate; the structure of each topic and nature of the material required different approaches by chapter. This said, we have all re-written, polished and homogenized all the chapters of the book to produce what we hope is a coherent journey through the topic of catastrophe risk management and modelling.

We have chosen to accredit ourselves in reverse alphabetical order, selected with a degree of randomness befitting the subject matter of this guide.

As well as the four main authors, many contributors provided material for chapters, or sub-chapters, of the book; sometimes an author contributed in more than one place. These contributions are summarized in the table below, and, as appropriate, authors are listed at the start of sections that they co-wrote.

The contributions of the many external reviewers drawn from outside the editorial team were also invaluable; in particular, we are indebted to Alan Calder, George Cooper, Jeff Gall, Claire Crerar, Paul Nunn and Claire Souch who reviewed the entire book or a large part of it.

We thank Wiley's editors and team for giving us the opportunity to produce this guide and assisting us along the way.

Main Authors

This guide has four main authors who also acted as editors. Here, we introduce ourselves in reverse alphabetical order.

Kirsten Mitchell-Wallace is the Regional Cat Manager for Europe, Middle East and Africa at SCOR, leading cat teams based in Zurich and Paris in support of property treaty business written from this region, including US Cat. Before this, she was Head of Cat Pricing and Methodology and responsible for coordinating the development of SCOR's own view of risk, as well as managing the Zurich-based cat team. Prior to joining SCOR in 2009, she was a Senior Catastrophe Risk Analyst at Willis, London, for 5 years, working first on European, then Japanese business. She started her career with two years at Risk Management Solutions in London and two years at risk management consultancy, Risk Solutions, from 2001. Kirsten has a PhD in Atmospheric Physics from Imperial College, London, and a Masters in Meteorology from Reading University, as well as a degree in Chemistry from the University of Bristol. She also has an International Diploma in Risk Management from the Institute of Risk Management. Kirsten is passionate about catastrophe modelling.

Acknowledgments: I would first like to thank my husband, Richard, for keeping our family fed and Arthur clothed throughout this project. Without his incredible support, my contribution could never have been possible.

I would then also like to thank the many people outside the editorial team who reviewed my chapter and made valuable suggestions: Sibylle Steimen, Claire Crerar, Alan Calder, Paul Nunn, Claire Souch, Iakovos Barmpadimos, Roger Bordoy, George Cooper, Thomas Premier and Thomas Linford. Thanks to Parvez Chowdury and Tobias Hoffmann for their review of the actuarial matter. Special thanks to Tom for associated discussions and to Paul for his support of this endeavour.

I would like to thank my many co-authors for their contributions and for being, without exception, a pleasure to work with. I have learned a lot! Thank you also to my fellow editors for a real team effort. In loving memory of my father, Derrick G. Mitchell.

Matthew Jones is the founding Director of Cat Risk Intelligence, a UK-based company providing catastrophe risk management consultancy to the (re)insurance industry.

In his previous role as Global Head of Catastrophe Management for Zurich Insurance Group, Matthew led the organizational change required to establish a global catastrophe management team with consistent processes to provide catastrophe knowledge, systems, models and services across Zurich's general insurance lines of business. He worked for Zurich for fourteen years, including various roles in the actuarial pricing and catastrophe risk management fields. Prior to this Matthew was a reinsurance pricing actuary for St Paul Re in London.

Matthew graduated from the University of Nottingham in 1993 with a degree in Physics. He then completed a PhD in Oceanography and Remote Sensing from University College London, while being based at the UK's National Oceanography Centre in Southampton. He is a Fellow of the Institute and Faculty of Actuaries.

Acknowledgments: I would like to thank my wife Zoe, and my children, Adam, Lauren and Becky, for their love, support and patience. I am extremely grateful to Jane Hayes for allowing me a sabbatical from Zurich to help write some of this book. I am also very thankful to Alan Calder, Jeff Gall and Claire Souch for the time they put into reviewing and making improvements to Chapter 5; to Fortunat Kind for his input and improvements (including the ‘Christmas tree’ diagram!); to Gary Hemming for his review of some actuarial pricing aspects; to Federico Waisman for allowing many of his model comparison exhibits to be included; and to Ye Liu for some very helpful statistical discussions.

John Hillier is currently a Senior Lecturer at Loughborough University, with research interests that include various geo-hazards (e.g. earthquake, landslide, flooding, extra-tropical cyclones), multi-hazard risk to property and infrastructure, use of impacts (e.g. loss data) to gain insights into physical processes, and inter-dependencies (i.e. ‘links’ or interactions) between perils.

He received B.A. (M.A. Cantab) and M.Sci. degrees in Natural Sciences specializing in Geology from the University of Cambridge, and a D.Phil degree in Marine Geophysics from the University of Oxford.

After studying he was awarded a research fellowship at St Catharine's College, Cambridge, and then worked for Zurich Insurance as a catastrophe modeller.

Acknowledgments: I am extremely grateful as ever for the love, tolerance and support of my wife, Katie; I do not say this enough, so I would like to say it explicitly here. My love and thanks also to Ben and Charlotte for putting up with Daddy working when you could clearly think of better things I should be doing.

Academically, I appreciate the stoic perseverance and professionalism of all 16 contributors on the perils in Chapter 3 in the face of requests for more detail in fewer words, or for correcting errors I inadvertently introduced when re-writing an initial submission to half its original length. The following reviewers did a great job of making sure we did a robust and thorough job, with numbers in brackets indicating sections: Rebecca Bell (Imperial College) [3.7], Thierry Corti (Swiss Re) [3.6], Mark Dixon (RMS) [3.3], Juergen Grieser (RMS) [3.4], Joanna Faure-Walker (UCL) [3.8], Greg Holland (NCAR) [3.2], Edmund Penning Rowsell [3.5], Tiziana Rossetto [3.9], Robin Spence [3.10]. This said, any remaining errors should be considered mine and mine alone.

Matthew Foote is an exposure management specialist with over twenty years of experience in the (re)insurance industry, including roles with Willis and Guy Carpenter reinsurance brokers, Risk Management Solutions, Mitsui Sumitomo and most recently Argo Group. For seven years Matthew was the Research Director of the Willis Research Network, responsible for the coordination and development of industrial-academic collaborations involving over fifty research organisations and universities.

Matthew began his career as a cartographer and geographic information specialist, working primarily with earth observation (EO) data and other imagery-based data. He has a First Class degree in Geography from Birkbeck, University of London, is a Fellow of the Royal Geographical Society/IBG and a Chartered Geographer.

Acknowledgments: My thanks are short and simple, first, to Paula, my wife, for all she has done, and to my children Ciara and Michael for inspiring me. I would also like to particularly acknowledge the efforts of Barbara Page, Adam Podlaha, Shane Latchman, Rashmin Gunasekera and Claire Souch, and to express my gratitude to Stuart Lane for his advice in the very early stages of developing this book.

Contributors

The following practitioners and academics contributed to this guide. For volunteering your time and expertise, we thank you.