The Global Risks Alliance (GRA)
Catastrophe risk management sits where natural science, engineering, statistics and finance meet. Reinsurers and insurers use it to decide how much risk to hold, how much capital they need and how to share risk with others. This page describes the discipline as research, not execution: what experts study and why it matters for systemic risk.
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The Reinsurance and Catastrophe sector overview covers reinsurance, catastrophe modelling, protection gaps and accumulated physical risk in the insurance system. It sets out who is in scope, from reinsurance analysts and catastrophe modellers, how risk reaches the sector and how it travels onward, analysed with NatCat modelling, exposure aggregation, and recovery and uncertainty. GRA builds shared industry understanding and does not advise, rate or assess individual firms.
Fig.How GCRI, GRF and GRA share one field while the authorities decide. Design, not a record.
The working screen behind this subject: its structure, terms and states. Names are placeholders and values illustrative.
The discipline studies the frequency and severity of extreme events, using extreme value theory and tail risk; the response of buildings and infrastructure to hazards, using structural and earthquake engineering; the financial terms of insurance and reinsurance, using actuarial mathematics; and the uncertainty in all of these, using uncertainty quantification and model validation.
Its central tool is the catastrophe model, which simulates many possible events, estimates damage and applies policy terms to produce loss distributions. See catastrophe models.
Reinsurance and Catastrophe frames are set by IAIS, EIOPA and Lloyd's and market bodies.
| Part | Channel Reinsurance and Catastrophe studies |
|---|---|
| Primary insurers | Cede peak risk |
| Reinsurers | Hold and retrocede |
| ILS investors | Take collateralised tail risk |
| Public pools | Cover sovereign and residual risk |
Shocks travel between these parts, and Reinsurance and Catastrophe studies the links: How far does a severe year reach into reinsurance layers? The evidence base is event sets, exposure and loss records.
Insurance claims fund rebuilding; where protection is missing, recovery is slower. See protection gaps.
Underestimated catastrophe exposure can threaten insurer solvency.
Reinsurance spreads regional catastrophe losses across the global market.
This page is general research for professional understanding. It is not underwriting, pricing, investment or legal advice, and it does not recommend any model, product or counterparty.
Hazard science comes from GCRI platforms such as Climate and Hazards and Oceans and Coasts. Public disaster finance is studied by GRA's Disaster Risk Finance. Transmission into the wider financial system is set out in financial-system transmission.
The field gateways for insurance and catastrophe, climate and hazards and disaster and crisis list every Consortium platform working on these subjects.
Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.
| Term | Definition |
|---|---|
| Transmission channel | The route by which a shock reaches financial institutions' balance sheets. |
| Reinsurance | Insurance bought by insurers to transfer part of their risk to another carrier, limiting the effect of large or accumulated losses on their capital. |
| Catastrophe model | Software that combines hazard, exposure and vulnerability modules to simulate many possible events and estimate the distribution of insured loss. |
| Systemic risk | The risk of disruption to financial services caused by impairment of all or parts of the financial system, with serious consequences for the real economy, as the IMF, FSB and BIS define it. |
The bodies and documents this page is read against. Status and editions change; each link goes to the issuing body.
The current service level is R0: information and enquiries. An enquiry receives a reference and names the next step; applications, payments, compute allocations and registrations open only when their team, terms and review capacity exist.