Recent weather-related events in the United States have shown how unready we generally are for crisis situations. When a crisis does occur, people turn to insurers, so it remains imperative for insurers to follow that old Boy Scout motto: Be prepared. The focus in recent years for many property/casualty carriers has been to examine risk exposure–particularly in storm- and earthquake-sensitive states. But those truly prepared for crises are focused on all levels of catastrophe-related risk within the enterprise.

“A lot of insurers are doing the catastrophe risk management, and several companies probably have had consulting firms do an evaluation study, but the difference is it takes a lot longer to build the [risk management] capability internally,” says Don Mango, director of research and development for GE Insurance Solutions (GEIS). “It's not just a software challenge. It's a training challenge; it's educating your management; it's getting people in the product-line areas to believe in the input; it's getting connections between planning, reserving, underwriting, and pricing, and they all have to be connected, and all that information ends up getting stored in these internal risk models.”

The organizational challenges are more difficult than the technology issues. “The software is well past what we need,” asserts Mango. “It's actually more sophisticated than we are capable of handling right now, honestly. The problems we're having all are related to organization. How do you get a company ready to use this in all of its decision-making?”