Identifying and Managing Property Risk Exposure with Location Intelligence
Location intelligence is becoming increasingly important in property risk mitigation as well as analyzing the risk concentration. Once the precise location identification of a given property is determined, location analytics can provide the ability to layer critical decisioning data to that property. By overlaying available data, past, present, and predictive information becomes available. Environmental, weather, and demographic data provides insight into potential risks from such things as flood, earthquake, railways, pipelines, weather events, crime, etc.
In June 2013, Alberta, Canada, experienced heavy rainfall that triggered catastrophic flooding which the provincial government described as the worst in Alberta’s history. Areas along the Bow, Elbow, Highwood, Red Deer, Sheep, Little Bow, and South Saskatchewan rivers and their tributaries were particularly affected. A total of 32 states of local emergency were declared and 28 emergency operations centres were activated as water levels rose and numerous communities were placed under evacuation orders.
In September 2013, the Insurance Bureau of Canada stated that insurable losses had exceeded $1.7 billion and continued to grow, making it one of the costliest disasters in Canadian history in terms of insured damages (and without accounting for inflation), surpassing the $1.6 billion cost of the North American Ice Storm of 1998. In looking at the immense costs involved in the Alberta floods, one can only speculate whether the banks would have made different decisions on lending in Alberta had they known the flood information. Location intelligence is very useful to help determine the full risk exposure for any company in these types of situations.
There is clearly a business case for financial institutions to be able to predict, score, and potentially mitigate their risks with respect to properties based on their location or proximity to zones prone to catastrophic flooding, forest fires, earthquakes, ice storms, and other catastrophic perils.