In this episode of A.M. BestTV, insurance observers, including Aon Benfield and AIR Worldwide, report that insurers should pay more attention to possible catastrophic events that, while remote, have affected the world and are likely to return. Typically, these unforeseen and high-impact events have been called black swans, but Rade Musulin, chief operating officer of Aon Benfield Analytics Asia-Pacific, said that these so-called black swan events are happening more frequently and need to be better recognized and managed. “We’re increasingly seeing a number of events that have been incorrectly referred to as black swans. These things invariably come as surprises to many risk managers, who often incorrectly assume that just because a risk hasn’t been modeled, the risk doesn’t exist,” said Musulin.
Sometimes referred to as “grey swans,” or “pear-shaped phenomena,” these events, such as solar flares, pandemics, nuclear incidents and geologic emissions, can be anticipated, according to Musulin. He said companies need to develop more sophisticated approaches to risk analysis, and that the insight can be used to supplement models so that risk managers can make better decisions.
Click on http://www.ambest.com/v.asp?v=greyswans514 to view the episode, which also contains commentary from Andy Kao, senior manager of business development at AIR Worldwide.
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