Wednesday, March 23, 2005

Catastrophe Modeling

Before Hurricane Hugo swept through Georgia and North and South Carolina in 1989, the insurance industry in the U.S. had never suffered a loss of more than $1 billion from a single disaster. Since then, numerous catastrophes have exceeded that figure. Hurricane Andrew in 1992 caused $15.5 billion in insured losses in southern Florida and Louisiana. Damages from the Northridge earthquake on the Western coast of the U.S. in January 1994 amounted to $12.5 billion.

Residential and commercial development along coastlines and areas that are prone to earthquakes and floods suggest that future insured losses will only grow -- a trend that emphasizes, as never before, the need to assess and manage risk on both a national and a global scale. 'People today are asking the question, 'How do we scientifically evaluate catastrophic risk?' Read on.

Tuesday, March 22, 2005

Do companies need Risk Management?

Risk is inevitable within business environments. Taking and managing risk is part of what organisations must do to create profits and shareholder value.
However, a market study by discovered that many organisations neither manage risk well nor fully understand the risks they are taking.
The study aims to discuss the level of knowledge about Risk Management amongst organisations, the management of IT risks, government encouragements towards Risk Management, and the advantages/disadvantages with Risk Management.

650 organisations (500+ employees) within Europe were interviewed in order to evaluate the level of knowledge and familiarity with the term; Risk Management. 64% of the respondents had a good knowledge of Risk Management and where able to give us the essence of what Risk Management is all about. Another 31% gave us a fair explanation, but most of them were financial orientated. The remaining 5% of the respondents were unable to give any explanation at all.

To fully understand Risk Management, two characteristics are essential: uncertainty and loss. Risk Management can be seen in relation the organisational response of companies to the challenge posed by dramatic changes of the economic and social impacts of natural hazards. Furthermore, Risk Management also involves evaluation of business strategy risks and the achievement of best practices.

The nature of Risk Management has changed throughout the recent years. Traditionally, management were concerned with risk categories like vendor, technology and project related risk. Nowadays, the impact of IT risks such as government regulations and outsourcing have forced organisations to rethink their risk strategies. Read on".