TROPICAL STORM RISK

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TROPICAL STORM RISK
Forecasts of Tropical Cyclone Activity to Benefit
Business, Industry and Society www.tropicalstormr
isk.com
May 2003
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The TSR Venture

• Founded in 2000, Tropical Storm Risk (TSR) offers
  the best available resource for forecasting the
  risk from tropical storms worldwide.
• The venture provides innovative forecast products
  to increase risk awareness and to help decision
  making within the (re)insurance industry, other
  business sectors, government and society.
• The TSR consortium comprises experts on
  insurance, risk management and seasonal climate
  forecasting.

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Leadership and Independence

• The TSR Storm Tracker provides the best available
  information for assessing the risk from active
  tropical storms worldwide.
• The TSR monthly-updated forecasts for seasonal
  tropical cyclone activity in the Atlantic, NW
  Pacific and Australian-region basins provide the
  best outlooks for assessing the likelihood of
  upcoming damage and disruption.
• TSR offers independence and transparency in
  forecast skill and significance.
• TSR has an impressive forecast track record.

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Storm Tracker Demonstration

• The TSR Storm Tracker provides real-time
  forecasts out to 5 days lead for all active
  tropical cyclone systems worldwide.
• Forecasts are updated every 6-12 hours and
  provide the best available information on storm
  strength, track and, track uncertainty all with
  various levels of zoom.
• A unique feature is our forecast 2-dimensional
  windfields (in knots) for all systems of at least
  hurricane force prior to extra-tropical
  transition.

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Atlantic Basin Regional Map

• Clarity of information, ease of use and relevant
  content information for (re)insurers and risk
  managers.
• Storm centred zooms for current and forecast
  positions out to 120 hours lead.
• Forecast track uncertainties out to 120 hours
  lead.
• Current and forecast windfields out to 120 hours
  lead.

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Lili - Forecast Track and Error
21 Hours Lead
69 Hours Lead
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Lili - Forecast Windfields
21 Hours Lead
69 Hours Lead
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Isidore - Forecast Products
23rd September 2002, 1200 GMT
Forecast Track and Error Out to 69 Hours Lead
Forecast Windfield 69 Hours Lead
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Historical Storms
Cyclone 05B, Orissa India, 29th October 1999
Super Typhoon Bilis Taiwan, 22nd August, 2000
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TSR Seasonal Forecasts
Forecast Regions
Forecast Availability
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Recent Forecast Performance

• North Atlantic 2002 The TSR forecasts were
  certainly the first to correctly anticipate a
  below normal Atlantic hurricane season in 2002
  (Chris Landsea, co-author of the Gray and
  NOAA seasonal Atlantic hurricane outlooks).
• NW Pacific 2002 TSR accurately predicted that
  accumulated cyclone energy would be 20-30 above
  average.
• Australian Region 2002/3 TSR accurately
  predicted that tropical storm and severe tropical
  cyclone numbers would be 1.0 standard deviation
  below normal.

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ACE Index and Skill Score

• Accumulated Cyclone Energy (ACE) Index
• TSR forecasts the NOAA Accumulated Cyclone Energy
  (ACE) Index which is the sum of the squares of
  maximum 1-min sustained winds every 6 hours for
  all systems while they are at least tropical
  storm strength. The ACE Index is a better measure
  of overall activity and likely damage than the
  number of tropical storms or hurricanes alone.
• Skill Score and Uncertainty
• TSR uses the percentage improvement in mean
  square error (MSE) over a running prior 10-year
  climatological forecast
• MSEClim () (1 - MSEFore/MSEClim)
  x 100
• TSR computes the 95 confidence interval on skill
  using the standard bootstrap method with
  replacement.

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TSR Hindcast Skill for Atlantic Seasonal ACE Index
Conclusion Skill to 95 Confidence
Exists from Early May
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TSR Hindcast Skill for NW Pacific Seasonal ACE
Index
Conclusion Skill to 95 Confidence
Exists from Early May
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TSR Hindcast Skill for Seasonal Hurricane Strikes
on the LA
Conclusion Skill to 95 Confidence
Exists from Early June
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TSR/Gray Skill Comparison

• TSR outperforms Gray at all forecast leads and
  using all skill measures.
• However, one can not conclude the TSR model is
  better than the Gray model since the latter has
  changed with time.

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Business Application

• The TSR correlation skill for predicting the US
  ACE Index in true independent hindcast mode for
  the 30-year period 1973-2002 is 0.48.
• In collaboration with the Helvetia Patria Group
  we are developing a method to simulate 10,000
  years of US hurricane landfalls, losses and ACE
  index forecasts to examine the business relevance
  of the forecasted US ACE skills for
  reinsurance/retrocession buy and sell strategies.
• Results show that a Forecast Strategy - which
  uses the TSR ACE Index forecasts to decide
  whether to buy - outperforms traditional buying
  strategies by about 10 in terms of protection
  purchase efficiency.

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Summary

• TSR offers the best available resource for
  forecasting the risk from tropical storms
  worldwide.
• The TSR Tropical Storm Tracker is the best
  tracker currently on the market and will become
  an industry standard.
• TSR has an impressive seasonal forecast track
  record and its predictions constantly outperform
  those from other parties.
• TSRs innovative forecast products provide
  increased risk awareness and, for the first time,
  the opportunity to improve reinsurance efficiency
  assessment.