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Planning Phase - Center for Risk Analysis for Climate Adaptation and Decision-Making (CIRCAD)

Overview

The information below describes an NSF-funded project for planning the formation of a potential new center. Planning activities include: industry engagement, workshop planning and execution; identification of research areas of strong industrial interest/need; realization of industrial support commitments; future preparation of a proposal to NSF seeking funding for a Phase I center.

We foresee a future in which the insurance industry, driven by cutting-edge research and cross-sector collaboration, becomes a cornerstone in building a resilient society. We anticipate forward-thinking insurance practices that not only provide financial protection in times of crisis, but also incentivize societal risk reduction, safeguard vulnerable communities, and catalyze the development of solutions by other sectors with complementary capabilities.

To realize this vision, Duke University and the University of Georgia are planning an Industry-University Collaborative Research Center (IUCRC) called the Center for Innovation in Risk-analysis for Climate Adaptation and Decision-making (CIRCAD). CIRCAD will be an interdisciplinary, high-impact research initiative that integrates natural science and engineering, data science and modeling, risk assessment and decision theory, and economic and policy analysis to develop and promote innovative and actionable strategies, products, and practices that meet the shared needs of the insurance industry in addressing climate risk.

Specifically, CIRCAD will pursue the following four overarching goals:

Design, evaluate, and support pilot testing of novel climate-responsive insurance solutions and risk mitigation strategies.
Develop methods and models for quantifying climate resilience at a systems scale, with a focus on the value of nature-based solutions.
Apply decision theory to the compilation, evaluation, and use of climate data and models to reduce uncertainty in risk management and investment decisions.
Convene and facilitate gatherings of key industry, government, and community stakeholders to align financial incentives and build resilience.

While pursuing these goals, we will recruit, mentor, and develop a highly trained, climate-ready workforce.

Universities

Duke University
University of Georgia

View Website

Personnel

Mark Borsuk
Center Director
+1 603 667 7454
mark.borsuk@duke.edu

Mark Ragin
Site Director
+1 516 933 1061
mragin@uga.edu

Awards

2413267

IUCRC Planning Grant Duke University: Center for Innovation in Risk-analysis for Climate Adaptation and Decision-making (CIRCAD)

Climate change poses multiple interacting risks to society and the economy which are only expected to intensify with additional warming. Adequate managing of risk is critical for a viable insurance industry. Most insurance, re-insurance, catastrophe modeling, and data services firms have concluded that climate risk poses unique challenges that are holding back this sector of the economy. Challenges include the non-linear and interconnected nature of climate risks, the uncertainty of global climate scenarios, and the paucity of critical actuarial data. As a result, insurance markets are struggling to balance consumers’ interests for access to affordable insurance against the insurers’ need to remain solvent. The proposed formation of an industry-university cooperative research center (ICURC), the Center for Innovation in Risk-analysis for Climate Adaptation and Decision-making (CIRCAD), and funding of its full Center planning process, will address the need for more science-based research on the systemic challenges posed by climate risk the creation of novel new insurance strategies and products. The proposed Center consists of two university Sites (Duke University and the University of Georgia). It will engage a diverse collection of interested parties as Center members who represent the insurance sector and its value chain. Members of the Center pay a membership fee to join. This industry money is then used to fund university-faculty proposed projects that address the highest priority sector needs that are collectively determined by Center members. The proposed Center will undertake interdisciplinary, high-impact, pre-competitive research that seeks to both improve climate risk modeling as well as foster broader, sector-wide innovations in risk distribution and assessment that align with industry products and practices now impacted by the unpredictability brought on by climate change. Broader impacts of the work include providing solutions to ensure financial protection in times of crisis, as well as incentivizing societal risk reduction, safeguarding vulnerable communities, and catalyzing the development and deployment of climate solutions for other sectors of the economy that require synergistic risk signaling and management capabilities. Other broader impacts include recruiting, mentoring, and developing a diverse, highly-trained, climate-ready workforce. The proposed Center for Innovation in Risk-analysis for Climate Adaptation and Decision-making (CIRCAD) will focus on tackling the present insurance crisis. It is motivated by developing creative and implementable solutions for the insurance industry whose losses are being driven by climate change. This will take place through cutting-edge research and cross-sector collaboration. It will also address regulatory issues and the need to create a climate-resilient society by overcoming a lack of balance in the industry which creates market inefficiencies in the form of obscured price signals and misaligned incentives which discourages public and private investment in climate-friendly projects. The proposed Center will focus on advancing insurance solutions at a systems level. Realization of the vision requires interdisciplinary, high-impact research that integrates data science and modeling, risk assessment and decision theory, and economics and policy. These element must be brought together to create and evaluate innovative and actionable climate risk management strategies, products, and practices. The proposed Center will consist of 25 or more faculty and senior researchers at Duke and the University of Georgia in the fields of engineering, climate science, public policy, decision science, economics, law, statistics, and computing. The faculty team is poised to engage with the insurance industry and other interested parties to develop a portfolio of sector, high-priority, high-impact projects. Anticipated intellectual advances include: identification of analytical and governance strategies for effective and equitable management of climate-related financial risk; improved understanding of subjective climate risk perceptions and their effect on risk management decisions; determination of the link between extreme heat and health outcomes; development of national-scale Bayesian probabilistic methods for multi-hazard characterization; and development of resilience metrics to inform planning, protection, and investment. Such advances will not only support the needs of the insurance sector, but, by disseminating the knowledge and tools produced by this research to communities, policymakers, and non-governmental organizations, will enhance climate decision-making and resilience on a national scale. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria. Read More >

2413384

IUCRC Planning Grant University of Georgia: Center for Innovation in Risk-analysis for Climate Adaptation and Decision-making (CIRCAD)

Climate change poses multiple interacting risks to society and the economy which are only expected to intensify with additional warming. Adequate managing of risk is critical for a viable insurance industry. Most insurance, re-insurance, catastrophe modeling, and data services firms have concluded that climate risk poses unique challenges that are holding back this sector of the economy. Challenges include the non-linear and interconnected nature of climate risks, the uncertainty of global climate scenarios, and the paucity of critical actuarial data. As a result, insurance markets are struggling to balance consumers’ interests for access to affordable insurance against the insurers’ need to remain solvent. The proposed formation of an industry-university cooperative research center (ICURC), the Center for Innovation in Risk-analysis for Climate Adaptation and Decision-making (CIRCAD), and funding of its full Center planning process, will address the need for more science-based research on the systemic challenges posed by climate risk the creation of novel new insurance strategies and products. The proposed Center consists of two university Sites (University of Georgia and Duke University). It will engage a diverse collection of interested parties as Center members who represent the insurance sector and its value chain. Members of the Center pay a membership fee to join. This industry money is then used to fund university-faculty proposed projects that address the highest priority sector needs that are collectively determined by Center members. The proposed Center will undertake interdisciplinary, high-impact, pre-competitive research that seeks to both improve climate risk modeling as well as foster broader, sector-wide innovations in risk distribution and assessment that align with industry products and practices now impacted by the unpredictability brought on by climate change. Broader impacts of the work include providing solutions to ensure financial protection in times of crisis, as well as incentivizing societal risk reduction, safeguarding vulnerable communities, and catalyzing the development and deployment of climate solutions for other sectors of the economy that require synergistic risk signaling and management capabilities. Other broader impacts include recruiting, mentoring, and developing a diverse, highly-trained, climate-ready workforce. The proposed Center for Innovation in Risk-analysis for Climate Adaptation and Decision-making (CIRCAD) will focus on tackling the present insurance crisis. It is motivated by developing creative and implementable solutions for the insurance industry whose losses are being driven by climate change. This will take place through cutting-edge research and cross-sector collaboration. It will also address regulatory issues and the need to create a climate-resilient society by overcoming a lack of balance in the industry which creates market inefficiencies in the form of obscured price signals and misaligned incentives which discourages public and private investment in climate-friendly projects. The proposed Center will focus on advancing insurance solutions at a systems level. Realization of the vision requires interdisciplinary, high-impact research that integrates data science and modeling, risk assessment and decision theory, and economics and policy. These element must be brought together to create and evaluate innovative and actionable climate risk management strategies, products, and practices. The proposed Center will consist of 25 or more faculty and senior researchers at Duke and the University of Georgia in the fields of engineering, climate science, public policy, decision science, economics, law, statistics, and computing. The faculty team is poised to engage with the insurance industry and other interested parties to develop a portfolio of sector, high-priority, high-impact projects. Anticipated intellectual advances include: identification of analytical and governance strategies for effective and equitable management of climate-related financial risk; improved understanding of subjective climate risk perceptions and their effect on risk management decisions; determination of the link between extreme heat and health outcomes; development of national-scale Bayesian probabilistic methods for multi-hazard characterization; and development of resilience metrics to inform planning, protection, and investment. Such advances will not only support the needs of the insurance sector, but, by disseminating the knowledge and tools produced by this research to communities, policymakers, and non-governmental organizations, will enhance climate decision-making and resilience on a national scale. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria. Read More >

Member Organizations

IUCRC affiliated member organizations are displayed as submitted by the Center. Non-federal organizations are not selected, approved, or otherwise endorsed by the National Science Foundation.

The opinions, findings, and conclusions or recommendations expressed are those of the Center author(s) and do not necessarily reflect the views of the U.S. National Science Foundation.