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Disaster risk consultant Stuart Fraser shows how investment in making risk data sets interoperable is opening up collaborations and improving risk understanding. 

 

Risk analytics is the foundation of risk prevention and mitigation, risk transfer and anticipatory action. As highlighted in the 2020 Insurance Development Forum (“IDF”) Paper The Development Impact of Risk Analytics, model accessibility is one of the main barriers to risk owners gaining risk insights to improve their ability to prepare for major catastrophe losses. 

Increasing global interoperability between models, improving transparency of methods and assumptions, and providing users with better access to model frameworks and data standards are all key to improving catastrophe risk management. Open standards can lower barriers to risk model development, expanding the availability of credible risk insights. This is important to achieving global development goals, and improving day-to-day operations in the insurance industry.

This is why the insurance industry has invested in the development of the open-source Oasis Loss Modelling Framework and the Open Exposure Data standard (OED), curated by Oasis on behalf of the Open Data Standards Initiative. It is why an increasing number of organisations are looking to use OED to support modelling and risk transfer, and why the IDF is coordinating collaborative development of an open exposure data transformation framework to transform data between OED and other formats. 

The challenges of exposure data

All catastrophe analysis is underpinned by exposure data, which describes the location, structure, usage characteristics, and value of assets. Catastrophe risk modelling has developed over several decades with a small number of vendor models influencing the format and structure of exposure data. This leads to data being captured and shared with biases towards particular features of those models, rather than the data adhering to an independent, industry-led view of attributes useful for risk modeling and exposure analytics in multiple frameworks and use cases.

Catastrophe analysts can spend a significant proportion of their time converting data from one proprietary format to another, to run a portfolio in multiple models. At the best of times, this is an expensive and tiresome process. 

Several organisations have invested heavily in developing in-house data conversion frameworks to make these tasks more efficient. However, sharing the burden of building and maintaining such data transformations across organisations and sectors would bring greater efficiency. It would also enhance the transparency of assumptions made in these data conversions, improving consistency of inputs in multiple-model views of risk.

Coordinated collaboration

The IDF has coordinated the collaboration of over 30 organisations via the IDF’s Interoperability Technical Working Group (ITWG) to design and develop a model-agnostic open exposure data transformation framework. The ITWG is a workstream of the IDF Risk Modelling Steering Group (RMSG). This open-source software package will allow analysts to transform data using consistent ‘mapping files’ that have been developed, reviewed and published by expert model users in partnership with model vendors. 

The aim of this framework is to maintain the fidelity of source data throughout the risk modeling and analytics process and to provide an independent, industry-led ‘best-practice’ transformation that can be trusted, and also adjusted easily to meet specific client or portfolio needs.

The framework encourages clear communication of how each data field – and its values – have been transformed between model formats. We have published and continue to improve a property exposure data transformation between AIR Worldwide’s Catastrophe Exposure Data Exchange (CEDE) and OED formats, both of which are publicly available. 

By supporting data transformation into and out of OED, the open exposure data transformation framework should accelerate the take-up of open risk modelling, with all the advantages that brings.

A common resource for all

By making the open exposure data transformation framework open-source, the IDF is encouraging expert users to build a common resource for all. 

We aim to continue to build transformations between OED and multiple industry models, keeping those transformations in step with improvements and expansions of OED as well as updates to vendor model formats. The framework architecture offers the potential to support transformation of model results data, as well as exposure data.

Importantly, the framework is also being enhanced to offer transformation of data between OED and the GED4ALL (Global Exposure Data for all) format used in the development sector. Ultimately, by facilitating greater exchange of risk data between insurance, humanitarian and development sectors we can promote cross-sector application and improvement of risk insights. 

Increasing cross-sector data collaboration gets us closer to the IDF vision of a world in which barriers between risk programmes in private and public sectors are broken down.

Several key initiatives recognise the value of the open exposure data transformation framework. It is seen as a core part of the Open Data Standards Initiative, encouraging adoption of the OED in order to run models in Oasis LMF. Meanwhile, the Climate Resiliency Council (CRC) is building on the US-based Catastrophe Modelling Operating Standards (CMOS) Initiative recommendation to “continue the ITWG work to develop conversion and mapping assets with model providers owning mapping definitions/interpretations to ensure fidelity of treatment”, by developing testing and validation capabilities within the framework.

This connection of interoperability programmes on both sides of the Atlantic is building a strong foundation to support truly global reach and development.

Dickie Whitaker, CEO of Oasis LMF, said:

“The most important thing about Oasis is not that it is open source, but that it 

has developing standards and enables interoperability – these are fundamental to effective data and knowledge sharing. It is what allows for simple and cost effective adoption by different people in different countries with different risk questions.

Working together, standards and interoperability solve so many challenges when it comes to breaking down barriers to improving risk understanding around the world. In the future, we

need to see more standardisation around what openness is and the vital role it plays in using catastrophe models. Increased adoption of standards across commercial and academic model providers, as well as increased and more consistent use of APIs are vital components to global success.”

Christopher McDaniel, President of the Climate Resiliency Council (CRC), said:

“CRC aims to advance the industry’s capabilities to serve customers and improve societal resistance in the rapidly evolving climate risk landscape by harnessing data, technology, innovation, and expertise to reinforce and advance new solutions. 

Interoperability of data and models is critical to allowing relevant sources for tracking climate impacts at international, national and local levels, and that is why it supports the development of an open exposure transformation tool. CRC will be actively engaging in the data transformation by developing testing protocols and encouraging take-up of the open transformation framework in collaboration with the IDF.”

The IDF welcomes all contributions to this effort – including expert review and improvement of mapping files, code development, and beyond. To contribute to this effort, please contact stuart@disaster-risk.uk.

Date

18th October, 2021

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