A new web-based earthquake risk assessment platform called OpenQuake has been launched by the Global Earthquake Model (GEM) Foundation, enabling a greater understanding of these risks for the reinsurance, ILS and catastrophe bond market.
GEM’s newly established earthquake tool offers comprehensive information and sources on global earthquakes, and is the product of a collaboration of more than 300 international earthquake experts.
The United Nations Office for Disaster Risk Reduction (UNISDR) has praised the new platform and the organisation’s head, Margareta Wahlstrom, described OpenQuake as a “major milestone for GEM and the community of earthquake hazard and risk experts.”
Wahlstrom continued to explain that the fundamentals of disaster risk reduction (DRR) policy and action lies with the understanding of the risk, an aspect of OpenQuake that the reinsurance, insurance-linked securities (ILS) and cat bond markets could certainly stand to benefit from in the future.
A free, open source earthquake platform has the potential to provide more granular data and information on earthquake risks, which could help to expand the reinsurance, ILS and cat bond markets’ activities into new regions of the globe.
Fatalities and economic losses as a result of earthquakes is something Wahlstrom says, “can only be mitigated or prevented through DRR efforts,” and the post-disaster recovery capabilities and financial back-bone offered through ILS instruments such as cat bonds can go a long way to aid DRR efforts as a source of contingent post-disaster risk financing.
As OpenQuake provides valuable information and insight into the potential impact of earthquakes in developing and developed regions of the globe, the current reinsurance space, which is abundant with capital, can look to deploy more capacity in these regions.
Ultimately this has the potential to create new opportunities for underwriters, ILS managers and even catastrophe bond investors, at a time when innovation and the entry into emerging markets is vital for those hoping to remain relevant, in an ever-softening sector.
Wahlstrom notes that while GEM’s new platform is certainly a step in the right direction and will likely prove invaluable to how the world assesses earthquake risks, it’s vital that they have “the engagement of the scientific and engineering community to ensure that happens and that the information is communicated in an accessible way to policymakers.”
GEM Foundation Governing Board Chairman, Dr. John Schneider expressed delight at working closely with the UNISDR in the future to increase the scope of its earthquake risks mitigation and prevention efforts.
While GEM’s Secretary-General, Anselm Smolka said; “Our vision of a world that is resilient to earthquakes will get a significant boost from the OpenQuake platform.”