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Amlin and Oxford University to collaborate on modelling risk study
Written by staff reporter
Amlin has commissioned the Future of Humanity Institute at Oxford University’s Oxford Martin School to carry out research into the systemic risk of modelling. The use of models by the insurance industry has contributed to a greater understanding of risk and more efficient use of capital. However, as the use of models becomes ever more prevalent, there is greater scope for systemic risk within individual companies and across the re/insurance market.
A unique feature of the research project will be to try to evaluate the role of human behaviour such as cognitive bias in the use of models, together with other approaches to complex systems such as network theory, alongside more conventional assessments of modelling. A particular focus of the project will be catastrophe modelling. Oxford's Future of Humanity Institute brings together a wide variety of study fields including mathematics, philosophy and science.
“Over the past few years, systemic risk has grown into a major topic of interest for a variety of fields," said Nick Bostrom, director of the Institute, University of Oxford. "Financial collapses and the increasing interconnectedness of key institutions suggest that the study of systemic risk warrants serious consideration. Some risks have extremely high stakes, so failure to understand and characterise these phenomena could be catastrophic."
Commenting on the three-year programme, Simon Beale, group chief underwriting officer at Amlin, said: “We believe that the idea of ‘systemic risk of modelling’ resonates with many people in our industry, and like any systemic issue, it is complex and addressing it will require strong collaboration across the industry and academia. Amlin is not just funding the research but also taking an active role, with insurance practitioners testing academic ideas. We hope that funding public research will help bring the best minds together, so that as an industry we find ways to manage and mitigate this risk for the benefit of our clients and stakeholders.”