A Critique of Pandemic Catastrophe Modeling

Abstract

Catastrophe modeling is a popular risk assessment tool for the insurance industry and has been applied to a variety of natural disaster events. More recently, catastrophe modeling techniques have been extended to events, such as pandemics, where the range of possible scenarios is less understood due to the complexity of the hazard and the dependence of event magnitude to human response. Some general limitations of catastrophe modeling are discussed in the context of pandemics—such as the failure to distinguish natural variability from incertitude and the difficulty of ensuring a representative model—along with recommendations for minimizing surprises.