Global climate change and globalization of markets pose a new challenge; Tail Risks. Severity of losses is fat tailed and heretofore independent damage types are coupled in tail dependence. Successive ‘worst cases’ keep getting much worse, historical averages don’t predict, pooling risks does not spread risks, and traditional risk management strategies do not work.
Goals
A small interdisciplinary group of climate scientists, mathematicians, economists, insurance specialists and policy analysts will discuss: What is known mathematically about tail risk? How does this affect business as usual? How do we keep insurance markets working? How should we mitigate tail risk? What should government do/not do? The goal of the workshop is to gather thoughts, materials and data on these questions.
Sessions
- Climate Change and Extreme Events
- What extreme events are impacted by climate change?
- How are these events being altered?
- How are the empirical distributions of impacts from extreme events characterized?
- Natural Catastrophes and Insurance
- What do loss distributions reveal about tail risk?
- Can we insure fat-tailed and tail dependent risks?
- What is the role of government in catastrophe insurance markets?
- Tools for Evaluating Tail Risks
- What are current approaches to detection and measurement of tail risk?
- How do fat tails affect risk estimation?
- Can we diversify tail risk?
- Policy Implications of Tail Risks
- How much is society willing to pay to reduce tail risks?
- Who pays for tail risks?
- Can mitigation thin and de-couple tails?
- What decision criteria should be used?
For more information please email organizers Roger Cooke and Carolyn Kousky.
The conference will begin at 08:30 on 2 February and conclude with an RFF First Wednesday seminar over lunch on 3 February. This lunch is a panel discussion open to the general public and policymakers.