The Tropical Storm Risk (TSR) venture developed
from the UK government-supported
project on seasonal tropical cyclone prediction
which ran from October 1998 to June 2000.
TSR uses cutting-edge science and technology to develop
innovative products to benefit risk awareness and
decision making in business, government and society.
US hurricane total insured loss contingent on the TSR 1st August forecast. The
chance of a large total loss is clearly much higher in those years when the
forecast is high. For example, a total hurricane insured loss of $10 bn is
eight times more likely to occur when the forecast is high compared to when it
is low. Clearly if extra reinsurance cover were purchased in the high forecast
years a company's volatility in losses (or risk) would be reduced. (Figure
taken from Saunders, Lloyd-Hughes and Hilti (2005)).
Probability (in percent) of experiencing 1-min sustained wind speeds of at
least tropical storm strength (34kt or 39 mph) from hurricane Frances. The
diagram refers to the 69 hours starting at 15:00 GMT on September 1, 2004 when
Frances was located north of the Dominican Republic. Click on image for