JASON MARSHALL: Sure, yeah. So when we think about analytics in the context of terrorism and political violence, we're largely referring to the advanced tools and models that we are able to use by taking in a client's operational and property data. So on the one hand, we do a more probabilistic analysis that allows us to measure and benchmark relative risk and benchmark that across a variety of geographies and industries.
On the other hand, we also do a more deterministic approach where we take a specific and defined event and measure what that loss would be given that event would take place. So together, we're able to provide a holistic approach that allows businesses and insurers to navigate uncertainty, align their risk transfer strategy with their actual exposure, and at the end of the day, make smarter decisions that protect people, assets, and operations.
MARY TIFFIN: Great awesome. Thank you so much for that introduction. Now, the crisis management sector is so broad, and I feel like the risk landscape is constantly evolving, so I'd love to hear more about what specific perils are you able to model using the analytics process.
JASON MARSHALL: Sure. So the main perils that we model - and we model a bunch, include terrorism and sabotage, war, and civil unrest, which is often part of this broader SRCC - Strikes, Riots and Civil Commotion category. We also focus on more specialized perils, such as kidnap and ransom, and active assailant. And the way that we're able to analyze these perils is by using a continually updated risk intelligence platform that essentially gives us thematic heat maps and spatial analytics diagrams that allows us to identify hotspots for any given particular peril.
Once we have that, we're able to understand where the hotspots are and overlay that with a layer of proprietary data, that essentially shows us where potential threat targets might be. Once we have those threat targets, we're then able to incorporate client data so that we can understand the relationship, whether that be physical, geographic distance, or in a more collateral supply chain sense, the relationship between a client's exposure points and these perceived targets.
So the reason that this is so important is because something like political violence risk is not monolithic or uniform by country or even a given city, and we often find that these risks can vary from block to block. So by using the data that we've collected and the advanced tools that we've built out, we're able to capture that nuance.
MARY TIFFIN: So once you're able to identify these threats and these hotspots, what is the process like for actually quantifying and understanding a client's exposure or proximity to these different perils?
JASON MARSHALL: Sure. So we certainly do that proximity analysis, which I mentioned before. And this could be proximity to locations like transportation hubs, government facilities, any type of high-profile monument or landmark. And in addition to that, we also do a lot of accumulation analyses where we measure the total insured value that could be found within a given radius or distance.
We also do a lot of hazard footprint analysis where we look at blast zone radii, for example, so that we can simulate what might happen in the event of an attack. This attack could be the detonation of a truck bomb. It could be any type of improvised explosive device. It could be a rocket or mortar attack, the release of chemicals, an active shooter event - just to name a few.
And at the end of the day, what we have by simulating these events is we're able to come up with the Probable Maximum Loss, or the PML, for any given particular client. Knowing this PML value is extremely crucial because it's able to inform policy limits, retentions, and it's able to identify any gaps in security or evacuation protocol that are relevant when trying to make an insurance portfolio more resilient.
MARY TIFFIN: I know that you guys have a couple of different tools at your disposal. I've heard of one, it's the Global Peril Diagnostic tool. I was wondering if you'd be able to walk us through that model and discuss how your team uses that.
JASON MARSHALL: Sure, so the Global Peril Diagnostic tool, or GPD, is really our core analytics engine here at WTW. It essentially functions as an ETL processor - so Extract, Transform, and Load. And what it does is it takes in client data and it overlays it with a political violence risk score that's based on historical incidents and also terrorist threat proximity.
From there, it then normalizes these scores and compares them across regions. And afterwards, it actually explores how these scores have evolved over time. So finally, this transformed data is then loaded onto 2D and 3D maps so that we're able to use more data visualization and inform smarter decision-making.
And in addition to this, I also want to mention that we also utilize Lloyd's RDS, or Realistic Disaster Scenario tool - which is a standardized stress test across the insurance market, which essentially simulates what a terrorist event would look like. These are often plausible but very severe terrorist events. What we're able to do from the results of this RDS is combine the RDS results with site-specific insights that are generated from GPD to compare a client's exposure with what the broader insurance market views as worst-case scenarios.
MARY TIFFIN: Great, awesome. Thank you so much for going more in depth about how these tools work together to create this holistic threat assessment for businesses and organizations. So as we approach the end of our time, I would love to hear your perspective about how these findings are really impacting risk decision-making in this day and age. So from your perspective, why do you think analytics are so essential for risk management strategies in this current evolving geopolitical risk landscape?
JASON MARSHALL: That's a really great question because in this changing landscape, which you mentioned, it's really important for risk managers and businesses to not view these incidents as abstract concepts, but rather as tangible events that will have actual impact were they to occur. So it's really important that we are able to provide businesses and insurers with the estimations of what the costs might be - whether this is business interruption loss, whether this is casualty loss, or even property damage.
And what these estimates allow us to do is to understand whether current coverage - if there exists any - is sufficient or not. Because oftentimes what we find is that a client may be overinsured or underinsured. So really, our mindset in analytics is to bring clarity to a topic that's often clouded by uncertainty. And our belief is that objective data is the best way to do this.
MARY TIFFIN: Thank you so much for your perspectives and for your time today, Jason, and for sharing with us about the incredible work that your team does for Crisis Management here at Willis.
