catastrophe risk management. - BAE Systems [PDF]

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Idea Transcript


CASE STUDY

CATASTROPHE RISK MANAGEMENT. ASPEN

Aspen is a major reinsurance and insurance provider and has been providing cover for natural catastrophe risks such as hurricanes, floods, forest fires and earthquakes since its inception in 2002. Understanding exposures to such perils and managing the associated risks is key to Aspen’s business. The APEX project’s objective was to deliver a bespoke platform to assist Aspen’s underwriters with the assessment of catastrophe risks, and help to produce data on the company’s aggregate exposure to such risks. APEX went live in October 2011 and is now being used to manage more than a billion dollars of catastrophe exposure.

APEX can analyse 150 million records in 90 seconds.

THE CHALLENGE For the insurance industry, the importance of being able to comprehensively understand catastrophe risk exposures was highlighted in 2011, which will be remembered for the New Zealand earthquakes, Japanese tsunami, and flooding in Thailand. The need to continue the provision of such an important type of cover to affected areas and to provide a fair assessment of the risk with fair premiums is paramount to Aspen’s business approach. Aspen identified the need to improve its understanding of these risks and the APEX project was born. One of the project’s objectives was to improve the risk aggregation processes undertaken by Aspen’s dedicated Catastrophe Risk Management (CRM) team, which had grown organically since the company’s inception. Since then, Aspen has been seeking ways to make these processes more efficient, including replacing manual stages with automated steps, and enabling the company to optimise its use of capital.

HOW WE HELPED

THE RESULTS

Aspen selected BAE Systems Applied Intelligence as their chosen development partner. APEX was delivered using an ‘Agile’ methodology known as ‘Scrum’. Each release was split into iterations, within which the project team delivered against a prioritised set of requirements.

APEX has revolutionised the management of catastrophe risks within Aspen. Following the initial global roll-out in October 2011, the second phase successfully delivered in May 2012 providing Aspen with advanced frequency blending, data visualisation and potential loss scenario modelling capabilities. The project is expected to deliver a positive Return on Investment (ROI) within two years based largely on efficiency and decision-making improvements.

‘Agile’ was deemed to be the most appropriate approach due to tight deadlines and the heavy R&D nature of the project, and proved highly effective. A combination of close collaboration, regular business reviews and an ability to embrace change throughout the project ensured that the business requirements were met exactly, and in time for the go-live date.

Apex is now being used to manage more than a billion dollars of catastrophe exposure.

APEX has achieved significant benefits. For example, the production of portfolio exposure views of ‘Value at Risk’ can now be done 30 times faster (this is one of key metrics used by Aspen’s executives to run the business). With APEX, Aspen now possesses an industry-leading capability in the areas of risk pricing, risk aggregation and ‘What-if Analysis’. Furthermore the lead time for modelled loss aggregate reporting has been dramatically reduced, with a 100% improvement observed in the time taken to produce, reconcile and report modelled loss outputs. Following the introduction of APEX, the productivity of Aspen’s CRM, underwriting and actuarial staff has increased; they can spend less time processing data and more time analysing it. The platform will provide high levels of robustness and quality control for years to come. With its high degree of data integrity, modelling integrity and rapid production of management information, APEX will continue to provide invaluable insight into Aspen’s catastrophe exposures and risk drivers. Its success demonstrates how an IT project can be used to deliver true business value.

For more information contact:

T: +44 (0) 1483 816000 E: [email protected] W: www.baesystems.com/ai www.twitter.com/baesystems_ai

www.linkedin.com/company/baesystemsai

Copyright © BAE Systems 2014. All rights reserved. BAE SYSTEMS, the BAE SYSTEMS Logo and the product names referenced herein are trademarks of BAE Systems plc. BAE Systems Applied Intelligence Limited registered in England & Wales (No.1337451) with its registered office at Surrey Research Park, Guildford, England, GU2 7RQ. No part of this document may be copied, reproduced, adapted or redistributed in any form or by any means without the express prior written consent of BAE Systems Applied Intelligence.

DTNCICSEN_BEAU0614_ASPEN_v1

BAE Systems Applied Intelligence Surrey Research Park Guildford Surrey GU2 7RQ United Kingdom

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