Cambridge Judge Business School

CAMBRIDGE CENTRE FOR RISK STUDIES RESEARCH OVERVIEW

Professor Daniel Ralph, Academic Director

Centre for Risk Studies

Cambridge Centre for Risk Studies 2017 Risk Summit

CRS Dissemination and Engagement Activities■ 2017 Global Risk Index Launch (London)■ 2017 Cyber Risk Landscape Seminar in

collaboration with RMS (London & New York)■ Helios Solar Storm

o Scenario Launch in collaboration with AIG (London)

o European Space Weather Week (Belgium)■ Global Exposure Accumulation and Clash

Workshop in collaboration with RMS (London)■ Cambridge CRO Council “Leading Ideas in

Risk” Roundtable■ Risks and Benefits of Artificial Intelligence and

Robotics in collaboration with UN■ UK Cabinet Office Workshops

o Multi Threat Analysiso National Risk Register

Project Activities in 2016-17

Cambridge Global Risk Index 2017Integrated risk assessment to global economy from 22 threats

Solar Storm Risk Helios scenario of economic impact of large solar storm on US economy

Marine Insurance RiskExtreme scenarios for RDS of vessel loss

Impacts of Terrorism Events on City EconomiesParis attack study

NatCat FinCatFinancial market impacts from extreme natural catastrophe events

Cyber Risk Landscape 2017Recent cyber attack trends and implications for business risk

Cyber TerrorismAssessment of the threat to insurance of cyber attacks from terrorist organisations

Report in preparation

GEAC Consultation DocumentsDevelopment of Multiline Insurance Exposure Data Schema

Insurance Growth Opportunity and Risk AssessmentIntegrated risk assessment to global economy from 22 threats

Beyond NatCat: Cambridge Taxonomy of Threats

Famine

Water Supply Failure

Refugee Crisis

Welfare System Failure

Child Poverty

Hum

anita

rian

Cris

is

Aid

Cat

Meteorite

Solar Storm

Satellite System Failure

Ozone Layer Collapse

Space Threat

Exte

rnal

ity

Spac

eCat

Oth

er

Nex

tCat

Labour Dispute

Trade Sanctions

Tariff War

Nationalization

Cartel Pressure

Trad

e D

ispu

te

Trad

eCat

Conventional War

Asymmetric War

Nuclear War

Civil War

External Force

Geo

polit

ical

Con

flict

Terrorism

Separatism

SocialUnrest

Assassination

Organized Crime

Polit

ical

Vio

lenc

e

Earthquake

Windstorm

TsunamiFloodVolcanic Eruption

Nat

ural

Cat

astr

ophe

Nat

Cat

Drought

Freeze

HeatwaveElectric Storm

Tornado & Hail

Clim

atic

Cat

astr

ophe

Wea

ther

Cat Sea Level Rise

Ocean System Change

Atmospheric System Change

Pollution Event

WildfireEnvi

ronm

enta

l Cat

astr

ophe

EcoC

at

Nuclear Meltdown

Industrial Accident

Infrastructure Failure

Technological Accident

Cyber Catastrophe

Tech

nolo

gica

l Cat

astr

ophe

Human Epidemic

Animal Epidemic

Plant Epidemic

ZoonosisWaterborne Epidemic

Dis

ease

Out

brea

k

Asset Bubble

Financial Irregularity

Bank Run

Sovereign Default

Market Crash

Fina

ncia

l Sho

ck

War

Cat

Hat

eCat

Tech

Cat

Hea

lthC

atFi

nCat

CatastronomicsGDP@Risk as a metric for comparing impacts

50

55

60

65

70

2012 2013 2014 2015 2016 2017 2018 2019 2020

Crisis GDP Trajectory

GDP@Risk

2015 2016 2017 2018 2019 2020 2021 2022

Current Research Tracks

A. Emerging and Systemic RisksContinuing the research into individual threats, developing scenarios, and improving the understanding of emerging and rapidly changing risks.

B. Integrated Risk AssessmentUpdating, improving, and extending the framework, datasets, and analytics of the Cambridge Global Risk Outlook, developing standardized risk metrics for multiple threats to the global economy.

C. Use Cases of ResearchAligning the research activities and outputs to business decisions and practical applications in improving risk management practices in business and policy-making.

Cyber Risk Research at CCRS

SybilLogic Bomb

US CyberBlackout

Exposure DataSchema

AccumulationScenarios

UK CyberBlackout

CyberTerrorism

Cloud Service Provider Failure(‘Cloud Compromise’)

Ransomware(‘Extortion Spree’)

Financial Theft(‘Cyber Heist’)

Denial of Service Attack(‘Mass DDoS’)

Data Exfiltration(‘Leakomania’)

Cyber attack on Marine Cargo Port(‘Port Management System’)

Cyber Attack on Oil Rigs(‘Phishing-Triggered Explosions’)

Cyber Attack on Industrial Chemical Plant(‘ICS Attack’)

Cyber attack on Commercial Office Buildings(Laptop batteries fire induction’)

Cyber Attack on UK Power Distribution(‘Integrated Infrastructure’)

Cyber Attack on US Power Generation(‘Business Blackout’) * v1.1

Information TechnologyLoss Processes

Operations TechnologyScenarios of Asset Damage

Malware(‘Sybil Logic Bomb’’)

Research into Critical National Infrastructure Risk

A major systemic risk is the failure of the infrastructure on which modern businesses depend

This has been a key focus for our research over the past few years

Current research includes:– Mapping the Wide Area

Synchronous Grids of the world– Interdependencies of

infrastructure layers– Vulnerabilities and potential

failures

Cambridge Global Risk Index for Top 300 Cities

300 Cities22 Threats

$1.17 Trillion of GDP@Risk a year

Nuc

lear

Acc

iden

t

Pow

er O

utag

e

Cyb

er A

ttack

Sola

r Sto

rm

Hum

an P

ande

mic

Plan

t Epi

dem

ic

Sepa

ratis

m C

onfli

ct

Mar

ket C

rash

Sove

reig

n C

risis

Com

mod

ity P

rices

Terr

oris

m

Inte

rsta

te C

onfli

ct

Soci

al U

nres

t

Earth

quak

e

Trop

ical

Win

dsto

rm

Tsun

ami

Floo

d

Dro

ught

Free

ze

Hea

twav

e

Win

dsto

rm

Volc

anic

Eru

ptio

n

Annual Average Cost of

Catastrophe is 1-2% of

GDP:2017 Risk

Index

0 200 400 600 800 1,000 1,200

Market Crash

Interstate Conflict

Wind Storm

Human Pandemic

Earthquake

Flood

Cyber Attack

Separatism Conflict

Sovereign Crisis

Commodity Prices

Terrorism

Drought

Power Outage

Volcanic Eruption

Plant Epidemic

Solar Storm

Social Unrest

Temperate Wind Storm

Freeze

Heatwave

Nuclear Accident

Tsunami

Increase from 2015

Decrease from 2015

GDP@Risk ($Bn)0 20 40 60 80 100

Market CrashInterstate Conflict

Wind StormHuman Pandemic

EarthquakeFlood

Cyber AttackSeparatism Conflict

Sovereign CrisisCommodity Prices

TerrorismDrought

Power OutageVolcanic Eruption

Plant EpidemicSolar Storm

Social UnrestTemperate Wind

FreezeHeatwave

Nuclear AccidentTsunami

Risk of Ruin: Impact of Trillion Dollar Scenarios on Global Economy 1

10

100

1000

10000

100000

10000001 10 100

Finance, Economics & Trade Risks

Geopolitics & Security

Technology & Space

Natural Catastrophe & Climate

Health & Humanity

Global GDP Loss in $US trillion

ReturnPeriod(Years)

$1tr events have an 8 year return period $10tr events have an 47 year return period $16tr events have a 100 year return period $22tr events have a 200 year return period8yr

47yr

200yr

100yr

1tr 10tr 16tr 22tr

Level 4interstate conflict between China & India

Global virulent pandemic

Major global market crash

Solar storm impacting North America & Europe

Worst case hurricane season NE USA

Mt Fuji Eruption at VEI VII

Application of Key Use Cases for a Range of Audiences

Private sector companies and corporations

Financial services, investors, insurers, and bankers

Public sector authorities, governments, regulators

Geopolitical ConflictEmerging Risk Scenario

Social Unrest Emerging Risk Scenario

PandemicEmerging Risk Scenario

Cyber Catastrophe Emerging Risk Scenario

Global Property CrashFinancial Risk Scenario

Eurozone MeltdownFinancial Risk Scenario

Enterprise-wide risk monitoring Annual & Regulatory reporting

– 10K and Viability statements Insurance purchasing strategy Crisis and continuity management

– Management stress tests Emerging risk monitoring and stress test

design Monitoring risk for business units