Emerging risk technology improves industrial innovation

Industries from manufacturing to finance are managing emerging risks throughout their lifecycle using models from insure-tech firm Praedicat.

Melissa Boudreau, Vice President, Modeling and Chief Actuary 

The models, which objectively quantify the risk of any substance or practice that has published science, extend beyond insurance to include manufacturers and innovators of chemicals, pharmaceuticals, personal care products, food, and more.

Companies can answer questions such as, “should I change an ingredient in a process because it’s risky, or even shut down a process,” explains Melissa Boudreau, VP of modelling and chief actuary of Praedicat.

The tool helps companies avoid future mass liability associated with latent bodily harm, and preserve capital day-to-day. In one case, “Praedicat analysis showed that potential replacement chemicals could be as risky or more risky than the substance in use, saving the company money and time of retooling the product.”

Applications extend to financial services as well. A bank conducting an industrial company’s credit analysis can learn “whether there’s a risk of a mass liability lawsuit against them that they may not otherwise know about,” says Boudreau.

In analysing and scoring risk, Praedicat considers all peer-reviewed published science. To avoid potential research biases, “we use a weighted evidence model based on the relevance and nature of the study, then apply the old maxim to ‘consider the source,’” Boudreau explains. An article published in The Lancet, for example, is weighted with more confidence than a less-reputable journal.

Praedicat’s approach to liability risk modelling is new. Emerging risk groups could not previously access data on the full scope of emerging risk based on published science, at scale. While new to liability, the property insurance industry has successfully employed data to manage catastrophic risks for 25 years. “Prior to 1992’s Hurricane Andrew, such models were new and therefore not widely accepted,” says Boudreau. “Now, they are an industry staple.”

For more information please visit www.praedicat.com.

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