Catastrophe modeling

Catastrophe models are used primarily by the insurance, corporate and financial market sectors to understand their risk and model financial losses across their portfolios. 

With severe natural catastrophes becoming more frequent, severe and costly, it is more important than ever to quantify potential losses and manage risk. And, as regulatory requirements around climate risk mount up, catastrophe modeling is crucial for helping organizations to understand both future and present risk.

Fathom started as a global hazard modeling company and over time has become increasingly interested in the quantification of risk. We first began exploring spatial dependence methods in ~2016. Our catastrophe model is the result of decades of academic research into stochastic modeling and global datasets. It works by simulating millions of events over thousands of years, characterizing and assessing an organization’s exposure and vulnerability. It quantifies the potential losses via a range of metrics, including average annual loss (AAL) and exceedance probability. 

Global coverage of inland and coastal perils 

Fathom’s leading cat model is underpinned by the most comprehensive and technologically advanced hazard data available. It is built on our highly-accurate FABDEM+ terrain data that drives our award-winning Global Flood Map. The first of its kind to calculate the financial loss driven by all flood perils, both inland (pluvial and fluvial) and coastal, Fathom’s Global Flood Cat provides an enhanced, globally consistent view of risk.  

The importance of assessing catastrophe risk 

There were a record-breaking 142 natural catastrophe events in 2023, leading to approximately $280 billion in insured losses. It was the high frequency of extreme events that drove these losses and, as the climate changes, this driver of losses looks set to grow. 

Organizations across sectors now recognize the increasingly urgent need to assess, manage and quantify risk, particularly of secondary perils such as flood.