School of Thought

Oh, do we have thoughts

The Nature of Risk

The weather here in California has got us thinking about our last trip to Seattle. As I write this, I fear heading out to BART to dodge the torrential downpour that seems to persist off and on between coffee sips.

Seattle is like a maritime mashup of New York City, in terms of its sprawl, and San Francisco, with its intimidating hills. There are great views, diversity, and industry. Although, you may hear more than a few groans about Amazon’s takeover of the city.

In general, it seems like Seattle still has space for people who aren’t working in the technology industry.

And the industry we’re talking about, specifically, is the actuarial science industry. Our longtime client, Milliman, leads the way in that department. It’s headquarters sits at the epicenter of downtown Seattle.

When you first see their office building, it almost feels counter intuitive. It’s as if the bottom part of it was whittled away and it now sits teetering menacingly against a square of neighboring skyscrapers.

Well, it’s not as scary as it looks. You might guess that hundreds of actuaries wouldn’t decide to hang out there if that weren’t the case. In fact, we aren’t the only ones that have raised questions about it.

Photo by SoT Team

Photo by SoT Team

About this time, you might be wondering, “what is actuarial science?” In brief, it’s all things related to risk management—especially when it comes to anticipating natural disasters.

The rain has momentarily paused and I sit ruminating on the guarantee of my neighbor’s basement flooding. It’s a reminder that risk management is a concern to us all.

When you think of flood insurance (or fire insurance, as a more likely concern to us Californians) you don’t usually think of the people behind-the-scenes drafting up the chance percentages. However, there are scientists and mathematicians who regularly research current geographic and meteorological developments to calculate risk.

With drier summers, we have to be concerned about how fire insurance will meet the needs of residents across the Central Valley. These concerns, backed by science, help inform better policies for us all.

Maybe we’re not as concerned here in San Francisco about flooding, but somewhere else (against a very intimidating backdrop of natural disasters) it’s critical to understand how water damage would wreak havoc. It’s a difficult job, but somebody has to do it. 

Here, on the San Andreas Fault, we’re always thinking about earthquakes. It’s fascinating work these actuarial companies do to anticipate the real-time consequences of events before they happen.

Each disaster comes with a very specific set of circumstances, depending on where you live, what you own, and how much you’re willing and able to pay to insure yourself. Floods aren’t something we worry about up on these hills, but they’re still a real concern to lowland dwellers across the country.

Photo courtesy of Burst Stock Photography

Photo courtesy of Burst Stock Photography

Around San Francisco, earthquakes happen frequently but are generally small. Although, they say we’re due for a big one anytime now. They’ve been saying it for years.

For now, we’ll keep in mind that the architects know what they’re doing, and take this as a reminder to get ourselves some much-needed earthquake insurance. That’s about the most we can do for now.

What natural disasters are you worried about?

You can learn more about Milliman’s work and watch our agency’s videos here.