Megan Linkin of Swiss Re gave a presentation on planning for climate change using a risk management framework. She discussed how Swiss Re uses modeling expertise, the economics of climate adaptation methodology, innovative risk transfer solutions, and education services to help clients manage climate change risks. She provided examples of how Swiss Re worked with New York City to assess economic losses from storms and identify cost-effective adaptation strategies. Linkin also outlined Swiss Re's tools and knowledge sharing activities to build climate resilience for insurance clients and communities worldwide.

1. Rethinking Risk
in a Changing
Climate
Megan E. Linkin, Ph.D., CCM
Natural Hazards Expert, Swiss Re Global
Partnerships
Sandy: One Year Later
Monmouth University, October 29, 2013

2. Economic and Insured Losses
1980 - 2012
Source: Swiss Re Economic Research and Consulting


Increasing trend in magnitude of annual losses
Larger proportion of losses are uninsured
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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3. Planning for Climate Change using a Risk
Management Framework
Modeling expertise
The Economics of Climate
Adaptation Methodology
Innovative Alternative Risk
Transfer Solutions
Education and consultation
services
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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4. Planning for Climate Change using a Risk
Management Framework
Modeling expertise
The Economics of Climate
Adaptation Methodology
Innovative Alternative Risk
Transfer Solutions
Education and consultation
services
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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5. Swiss Re's proprietary model considers
four elements that determine a Cat loss
Hazard
Vulnerability
How often / how
strong?
Value
distribution
How well built and
protected?
Cover conditions
What exactly is covered ...
where...
and how?
 Sums insured
Example
Hurricane
“Charley”
Aug 2004
 Cover limits
 Deductibles
 Exclusions
 etc.
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013

6. Planning for Climate Change using a Risk
Management Framework
Modeling expertise
The Economics of Climate
Adaptation Methodology
Innovative Alternative Risk
Transfer Solutions
Education and consultation
services
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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7. The Economics of Climate Adaptation
Case Study: New York City

December 2012: Mayor Michael Bloomberg
launches the Special Initiative on Rebuilding
and Resilience (SIRR) to develop a
comprehensive plan to protect the city of
New York from future storms.

Swiss Re and McKinsey have a proven track
record in assessing damage, evaluating
natural hazard risk and identifying and
quantifying the costs and benefits of
adaptation measures in more than 20
countries and regions around the world
dating back to 2008.

Using information about infrastructure,
building stock and mitigation and adaptation
measures from the City, Swiss Re and
McKinsey performed economic loss
potential analysis for current and future
climate scenarios with and without
adaptation/mitigation strategies.
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
Source: The City of New York
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8. Planning for Climate Change using a Risk
Management Framework
Modeling expertise
The Economics of Climate
Adaptation Methodology
Innovative Alternative Risk
Transfer Solutions
Education and consultation
services
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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9. Traditional vs. Parametric –
Benefits to buyer
Topic
Traditional Insurance
Parametric Solutions
Use of Proceeds
Intended to cover loss
sustained
Used at buyers
discretion
Speed of Payment
Subject to loss
adjustment (can be slow)
Rapid: 2 – 6 weeks
Loss Adjustment /
Administrative Process
Yes - buyer may need
own claims adjusters
No – little claims
administration needed
Transparency
Loss settlement is
complex to explain
Parametric triggers
easier to explain
Pricing Flexibility
Limited modifications
Structure can be
adjusted to price
Changes in Exposure
Annual adjustments
No adjustment needed
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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10. How do Parametric solutions work:
MultiCat Mexico hurricane example
Trigger:
Hurricane of 920
mb or lower
through box =
payment
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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11. Planning for Climate Change using a Risk
Management Framework
Modeling expertise
The Economics of Climate
Adaptation Methodology
Innovative Alternative Risk
Transfer Solutions
Education and consultation
services
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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12. Knowledge Sharing
Increasing Climate Resiliency

Founding sponsor of Climate Week
NYC

Mind the Risk report
– Calculated affected population and lost
economic productivity for 616
metropolitan areas globally.
– NYC/Newark metro region: Ranked #1 in
potentially affected storm surge
population in US

100 Resilient Cities Challenge
– Support at least 100 cities in the next
three years to appoint Chief Resilience
Officers (CRO), create resilience
strategies, and establish a CRO support
network to share information and best
practices.
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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13. Expertise for our clients
CatNet

Web-based
hazard mapping
tool

Real time
information
regarding
impending and
on-going events.

Post event
footprints.

Swiss Re Global
Flood Zones.
Source: ©GfK GeoMarketing Map Edition World, Swiss Re GEOservices
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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14. Expertise for our clients
CatNet

Web-based
hazard mapping
tool

Real time
information
regarding
impending and
on-going events.

Post event
footprints.

Swiss Re Global
Flood Zones.
Source: ©GfK GeoMarketing Map Edition World, Swiss Re GEOservices
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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15. Expertise for our clients
CatNet

Web-based
hazard mapping
tool

Real time
information
regarding
impending and
on-going events.

Post event
footprints.

Swiss Re Global
Flood Zones.
Source: ©GfK GeoMarketing Map Edition World, Swiss Re GEOservices
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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16. Expertise for our clients
CatNet

Web-based
hazard mapping
tool

Real time
information
regarding
impending and
on-going events.

Post event
footprints.

Swiss Re Global
Flood Zones.
Source: ©GfK GeoMarketing Map Edition World, Swiss Re GEOservices
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
16

17. Expertise for our clients
CatNet

Web-based
hazard mapping
tool

Real time
information
regarding
impending and
on-going events.

Post event
footprints.

Swiss Re Global
Flood Zones.
Source: ©GfK GeoMarketing Map Edition World, Swiss Re GEOservices
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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18. Concluding Thoughts

Managing climate change and its impacts will require innovative, multidisciplinary approaches.

Insurance is a vital component when considering a holistic,
comprehensive approach to climate change related disaster risk
financing.

Understanding climate change is of paramount importance to the
insurance industry.

Academia, the public sector and private citizens can and should tap into
the wealth of risk management knowledge provided by the insurance
industry.
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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19. Thank you

20. Legal notice
©2013 Swiss Re. All rights reserved. You are not permitted to create any
modifications or derivatives of this presentation or to use it for commercial
or other public purposes without the prior written permission of Swiss Re.
Although all the information used was taken from reliable sources, Swiss Re
does not accept any responsibility for the accuracy or comprehensiveness of
the details given. All liability for the accuracy and completeness thereof or
for any damage resulting from the use of the information contained in this
presentation is expressly excluded. Under no circumstances shall Swiss Re
or its Group companies be liable for any financial and/or consequential loss
relating to this presentation.
M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013
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