Gregory Characklis, W. R. Kenan Jr. Distinguished Professor in the UNC Gillings School of Global Public Health, on the new Institute for Risk Management and Insurance Innovation
For the past 20 years, Gregory Characklis has worked to take the available information on the frequency and severity of natural events, such as droughts, floods and extreme temperatures, and translate these events into financial impact. This data then helps organizations make better decisions about how to manage risk.
The new Institute for Risk Management and Insurance Innovation will expand the University’s risk management research, both in terms of scale, bringing more people into this work, and scope, looking at a broader range of risks, including emerging threats like infectious diseases, cybersecurity and wildfires. It will also welcome a large cohort of undergraduates as part of the new minor in risk management within the UNC School of Data Science and Society.
Who will be collaborating on the work of the Institute for Risk Management and Insurance Innovation?
CHARACKLIS: We are a multidisciplinary group of researchers that has collaborated with faculty from most of the schools across campus, working closely with them and their students. The institute itself will have a permanent staff of four to six people, as well as a host of graduate students and post-doctoral researchers supporting our work.
We’re also engaging with more than 30 industry partners from the risk management and insurance industries, which includes big employers from across the state, the nation and the world. Our industry advisory board will help us identify the most pressing challenges for these organizations, provide us access to data that can improve our modeling, and give us both guidance and feedback that will inform our research.
How does your team translate threats into financial risk?
CHARACKLIS: It takes a lot of data, as well as an understanding of the underlying systems that give rise to financial risk. We use data science and advanced simulation techniques, such as machine learning, to develop computational models. The models quantify the severity and frequency of damaging events: describing the size of the losses and how often they will occur. Once organizations have this information, they can decide how to better manage these threats. For instance, can they just set aside cash reserves to compensate for losses when they occur, or do they need to take out additional insurance against these threats?
How will the new institute benefit both the University and industry partners?
CHARACKLIS: Risk management is a rapidly growing field. Growing losses from extreme weather and COVID-19 have really opened people’s eyes to the fact that there are many unpredictable threats that can have massive financial impact. The institute will give more students a chance to engage in research with strong societal impact. We’re also launching several new courses in the spring semester, which will form the core of a new undergraduate minor in risk management. The minor was recently approved and has already begun to garner significant interest from undergraduates.
One goal of our research is to supply our industry partners with valuable insights into their vulnerability to various threats, as well as to develop novel tools and strategies they can use to better manage the related financial risks. Another goal is to equip talented students with a broader and more advanced set of analytical skills, including those related to data science and newly emerging AI techniques. But, we want to go even further by giving our industry partners an opportunity to share their experiences with our students and provide them with a real-world perspective on the challenges society faces from current and emerging risks.
Distinguished and named professorships support renowned scholars and propel research at Carolina. These privately funded endowments help attract and retain the academic leaders of today, ensuring a state-of-the-art education for all Tar Heels.
As told to Audrey Smith
Photo by Jeyhoun Allebaugh
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