The Cambridge Centre for Risk Studies (CCRS) at the University of Cambridge Judge Business School is launching a new research consortium that aims to find ways to protect society against future systemic risks.
Funding will be provided by an international consortium of companies including Pool Re, the UK’s reinsurance mutual.
The research will support the creation and extension of public-private market institutions and develop new risk transfer products and advisory services. These may include:
- extensions of coverage terms for traditional insurance lines of business
- new types of insurance indemnification or risk sharing products
- structured parametric bonds
- corporate pools
- bi-party swaps
- other financial instruments
It will cover topics such as pandemics, cyber threats, geopolitical change, financial crisis, and climate change.
The research will enable exploratory design of new financial instruments and evaluate their benefit, both in terms of return on underwriting capital, but also in the potential consumer protection and societal benefits. Its results will better enable members to collaborate with public bodies – nationally and internationally – in risk reduction policymaking, thus improving global cooperation in reducing systemic risk.
“We are honored to be leading this private sector consortium – their guidance in steering our research will be invaluable as we create new private market risk management products and services together,” according to Dr. Michelle Tuveson, executive director and chairman of the advisory board at CCRS.
“The COVID-19 pandemic triggered the deepest economic recession in our lifetime. Our policies, preparedness and financial responses require a significant overhaul if we are to better equip and protect society from the next major systemic risk that threatens our way of life,” commented Julian Enoizi, chief executive officer of Pool Re, and chairman of the industry consortium.
“Systemic resilience needs the foresight of systemic backstops to which capital markets can respond. Modelling to support new financial instruments will be critical in addressing future crises,” said Dr. Andrew Coburn, chief scientist at CCRS.
“GDP-sized government interventions have been the solution to pandemic-sized events, but government action at this scale is typically ad hoc – better regulatory and financial structures are needed to protect societies from long term erosion of wealth,” said Professor Daniel Ralph, academic director at CCRS.
Dr. Trevor Maynard, director of systemic risk research at CCRS, said, “We look forward to applying our world-class research techniques to test and develop many of the initiatives being proposed. This will advance our research on the causes, linkages, and protection mechanisms for future systemic threats to society and the economy.”
About the Cambridge Centre for Risk Studies at the University of Cambridge Judge Business School
The Cambridge Centre for Risk Studies is based within the University of Cambridge Judge Business School. The centre works closely with business partners in tackling complex issues of management science in risk. This policy of deep engagement has enabled the centre to develop relevant solutions for businesses. The centre’s leadership combines academic excellence with industry experience.
About Pool Re
Pool Re is the insurance industry’s mutual for insuring terrorism risk in Great Britain, established in 1993 by the UK government. Pool Re exists to correct market failure, protect the UK economy and safeguard society and livelihoods from acts of terrorism. It offers a financial safety net for around £2.2 trillion of assets and businesses of all sizes.
Source: Cambridge Centre for Risk Studies, Pool Re
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