DISCUSSION ONLY-NOT FOR DISTRIBUTION1 “Emerging Risks for the Risk Manager” Presentation at the: State Risk and Insurance Management Association Conference 2011 Lance J. Ewing ARM, CRM, ERMP Vice President – Chartis

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What are “Emerging Risks for the Risk Manager”? 3 Emerging risks are developing or changing risks which are difficult to quantify but may have a major impact to the public entity. Identifying an emerging risk is critical to the long term success and financial viability of any State or governmental entity. Working with brokers and insurance carriers, risk managers can be better informed of emerging risks.

Emerging Risks: 5 Common Traits 4  High degree of uncertainty  Difficult to quantify and predict residual fallout  Are human, economic, natural or combination  Limited industry position or plan in place  Governmental involvement or lack can have an affect

Emerging Risks: Trending Now 5 Risk Managers Sample Awareness List:  Fracking  Nanotechnology  Regulation and policy changes  Environmental  Terrorist acts  Data compromise  Cyber attack  Natural disaster…subsequent domino affect  Natural resources shortage  Reputation risk  US/Global recession

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11 Emerging Risks: Natural catastrophe risk models may have limited applications to:  Tsunamis  Volcanoes  Tornadoes  Wildfires CAT Models are a major component for predictability but no model is perfect…Underwriting is still key.

Emerging Risks: Response An effective “emerging risk” approach requires five risk management cornerstones:  Identification  Categorization/Prioritization  Quantification  Qualification  Mitigation 12 But the approach requires a high degree of qualitative judgment from a variety of subject matter experts (internal and external) to prepare your organization.

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Chartis is a world leading property-casualty and general insurance organization serving more than 40 million clients in over 160 countries and jurisdictions. With a 90-year history, one of the industry most extensive ranges of products and services, deep claims expertise and excellent financial strength, Chartis enables its commercial and personal insurance clients alike to manage virtually any risk with confidence. Chartis is the marketing name for the worldwide property-casualty and general insurance operations of Chartis Inc. For additional information, please visit our website at 14 THANK YOU!