Strategic CAT Review for Global Chemical Company
Read how ABS Group helped a global company quantify and manage their seismic and windstorm risk exposure across their global portfolio.
Perform a strategic seismic and windstorm hazard review against the client's portfolio
Quantify the seismic and windstorm risk at the client's locations by ranking the exposure on a qualitative and comparative basis
Quantify the potential loss exposure due to seismic and windstorm hazards across the client's portfolio
Develop a risk reduction program for the client to manage and reduce their seismic and windstorm risk exposure moving forward
As a result of an extensive internal risk management review a major chemical company identified that they wanted to have a better understanding of its natural hazard exposure, particularly that of seismic and windstorm risks, across its global portfolio of sites to ensure its current insurance programs were accurate, efficient and fit-for-purpose.
ABS Group was selected as the client wanted an independent, unbundled provider that could keep supplying expertise regardless of the insurance carrier.
ABS Group was required to quantify the exposure faced by the client regarding seismic and windstorm perils and to provide recommendations for the client. The recommendations informed the development of a future risk reduction program to address asset exposures.
The work completed by ABS Group helped the client to quantify the exposure across its portfolio and also allowed it to plan reduction of the residual exposure at both key locations and those shown to have an undesirably high exposure that did not align with the clients risk appetite. ABS Group helped the client to visualize the future works required by developing a bespoke Natural Hazard Risk Reduction Program tailored to the clients specific needs.
- Understand and quantify seismic and windstorm exposure across the global portfolio
- Interpret the potential Probable Maximum Loss (PML) and Business Interruption (BI) values at locations to ensure the current insurance programs were fit-for-purpose
- Implement a risk reduction program to reduce residual risk moving forward
Strategic Seismic and Windstorm Hazard Review
A strategic hazard review begins by identifying where the clients locations are situated geographically, with particular attention to elements such as financial value and the number of locations in specific regions or countries. These assets are then geo-coded and mapped to enable our consultants to identify potential clusters, whereby a single event could impact multiple assets simultaneously.
Then we overlayed seismic and windstorm hazard maps derived from local building codes, industry-standard sources and tools, and in-house databases. This enabled us to undertake a first diagnosis of the clients potential exposure to seismic and windstorm hazards and identify potential hotspots. Once the initial review was completed and verified, the exposure at each location was ranked both on an individual, country and regional basis.
The output from this part of the study provided the client with a snapshot of where potential hotspots exist in terms of highly exposed assets.
Catastrophe (CAT) Modeling
ABS Group utilizes state-of-the-art CAT modeling platforms to help our clients understand their potential financial exposure to natural hazard events. A key element of this study was the use of these models to analyze the potential loss expectancy faced by the client as a result of seismic and windstorm hazards.
The make-up of the clients portfolio was reviewed to identify facility types, main structural composition, facility age, critical equipment and more. These elements are recorded and then inputted into the models to calculate potential losses at a range of return periods. The output from the models was analyzed and checked by ABS Groups consultants with the losses calibrated based on our extensive experience of proven failure modes at similar facilities.
The final output was then used to review the clients existing insurance policies to identify potential issues of under or over-insured levels, activation and exhaustion points in terms of a return period and to identify locations that could be significantly exposed in terms of property damage and business interruption.
Risk Reduction Program
ABS Group utilized the output from the CAT modeling and the strategic hazard review to develop a risk reduction program for the client to target the locations shown to be in either a high hazard zone or sites significantly exposed from a financial perspective. The risk reduction program included a range of techniques from desktop site reviews to on-site risk audits, to identify specific on-site vulnerabilities and suitable mitigation options to reduce risk levels.
Our solution provided the client with a greater understanding and appreciation of the seismic and windstorm hazard exposure present across their portfolio of assets. This has enabled the client to:
- Have a better understanding of the potential financial implications from a property damage and business interruption standpoint
- Ensure insurance programs are fully optimized
- Reduce the levels of vulnerability through the implementation of a targeted risk reduction program