Suddenly, risk is hot. Not the financial kind, per se, but the risk of natural disasters inflicting heavy losses on markets, insured assets and even the social fabric of whole countries. And the folks who measure and model that risk—engineers, physicists, meteorologists and social scientists—are more in demand than ever, reports the scientific journal Nature.
Even as climate change increases the ferocity of severe weather, the planet is covered with more (vulnerable) infrastructure than at any point in the past—so the the frequency of costly black swans is increasing. In 2012, worldwide, natural disasters inflicted $160 billion in damages, estimates Munich Re, one of the world’s biggest re-insurers, or companies which insure insurers. Most of that damage was due to a single event—Hurricane Sandy—and 90% of total losses occurred in the US.
Companies like Maplecroft, which sells “risk intelligence,” are scaling up in response to demand from banks, insurance companies, and international not-for-profits. University programs that might have once sent their graduates straight to academia, like Columbia University’s Lamont-Doherty Earth Observatory, are now seeing them hired by the insurance and financial sector, as builders of mathematical and geographic models of risk. Jobs are also plentiful at reinsurance companies like Swiss Re, which are after all the most exposed to large-scale, systemic planetary risk.
It would be easy to be cynical about the blossoming of a field that owes its existence to an increasingly volatile earth system, but the flip side is, managing risk at a global scale has the potential to make the firms with the most money—and therefore the most to lose—more responsive to environmental disaster.