Pandemic Risk Modelling

This chapter will explore the nature of communicable diseases, a brief history of pandemics, and will introduce the mathematical models used to evaluate the risk pandemics pose to human populations. Such modelling is used in a public health context, where modelling past and current events provides insight in how to respond most effectively to a new outbreak. It is also used in the context of risk mutualisation and transfer. As recently as 2013, a survey of 30,000 insurance executives placed global pandemic as the biggest extreme risk facing insurers (Towers Watson. 2013. Insurers Rate Global Pandemic as the Major Extreme Risk. 3 December). The chapter will introduce the principles used to model these events in the insurance industry and will conclude with a review of the way these models are applied in an unconventional risk transfer context.