Model management took centre stage on the opening day of the 22nd Asia Nat CAT and Climate Change Conference in Makati City, as industry experts discussed how risk models can remain effective in an increasingly complex environment shaped by climate change and cyber threats.
During a panel discussion, speakers highlighted the need for greater transparency and understanding of modelling methodologies. JBA Risk Management Technical Director Dr Pradeep Mandapaka stressed the importance of openness in model development to build confidence among users. “When incorporating the effects of climate change into models, end users need to know what is being changed and introduced. Transparency in methodology, documentation and data sets used will improve confidence in the model,” he said.
Gallagher Re Regional Director and Head of Analytics Hemant Nagpal said understanding models beyond the data itself is essential. He explained that his firm analyses new models in detail, comparing their components and outputs with other available models to determine whether they are fit for purpose and to help clients better understand their strengths and limitations.
Nagpal also highlighted the importance of tailoring models to clients’ specific requirements, including adjustments based on climate conditions and loss experiences. “If there’s a need for model adjustment, whether based on climate or losses, that should be considered,” he said.
Taiping Reinsurance General Manager of the Analytics Centre Michael Fung agreed that models should be viewed as a guide rather than a definitive answer. “Insurance existed before models. Modelling is becoming more advanced and is another underwriting tool. We have to understand what is driving the results, the risks in the region and the data behind them. The model is a guideline, not the holy grail,” he said.