Neurologist scoops Lloyd's Science of Risk Prize
Thu 24 Nov 2011
Lloyd’s 2011 Science of Risk Prize has been awarded to five leading research scientists, including the Prize’s overall winner Klaus Wunderlich for his illuminating paper on behavioural risk.
Leading risk research
Klaus Wunderlich and his team at UCL Wellcome Trust Centre for Neuroimaging picked up the top prize at an award presentation and conference held at Lloyd’s on November 24. His groundbreaking research into risk and decision-making earned him Overall Winner and Behavioural Category prizes.
Wunderlich and his team used brain-scanning technology to reveal how the human brain makes risk-taking decisions. Wunderlich found that the brain learns correlations between risk and reward, and uses this in decision making.
The research suggests that the brain may be better at learning through experience and continuous observations than from studying statistics or charts. The findings – which are particularly relevant for underwriters that make financial decisions based on understanding correlations – could be used to promote better decision-making strategies, says Wunderlich in his paper.
The judges were impressed by Wunderlich’s innovative use of brain scanning technology to shed light on this key area of research into risk for insurers.
“The paper gives insight into how the brain is capable of learning from prior experience, and how this influences the decisions we make,” said Trevor Maynard, Head of Lloyd's Exposure Management and a member of the judging panel. “The entry stood out as behavioural risk is such an important topic for insurance and because the paper is stimulating research into this key topic.”
Wunderlich was joined at the prize giving event by the four other category winners, all of which presented their papers and were invited to attend a diner in the Adam Room at Lloyd’s One Lime Street.
The category winning research included some excellent and thought provoking papers on a range of issues of important to insurance – including climate modelling; post catastrophe satellite-based damage mapping; fire risk analysis; and capital allocation calculations for insurers.
Lloyd’s Science of Risk Prize was launched in 2010 to recognize outstanding scientific research that improves insurers’ understanding of risk in a number of fields. The inaugural Science of Risk Prize was won last year by Met Office researcher Doug Smith for his paper on improving the accuracy of long range hurricane forecasting.
“The Science of Risk Prize continues to stimulate research into risk that is both relevant and important to the insurance industry,” says Maynard. “By fostering relationships and partnerships with scientists and academia, the Prize is helping highlight and focus scientific research that further develops insurers’ knowledge of risk.”
Prizes are awarded for the best overall research paper as well as the five categories – Climate Change, Biological/Technical, Natural Hazards, Behavioural Risks, and new for 2011, Insurance Operations.
The winner is awarded a £5,000 cash prize, while the category winners take home £2,000 each.
As an important provider of protection for natural catastrophes and insurance to some of the world’s leading companies, Lloyd’s underwriters face a number of challenges that overlap with areas of academic research, such as climate change or studies into emerging risks.
“The record catastrophe losses at the start of this year are a reminder of the importance of understanding risk, be it an earthquake, climate change or an emerging technology,” says Richard Ward, Lloyd’s Chief Executive.
“Lloyd’s Science of Risk Prize continues to help Lloyd’s forge closer ties with the scientific community. By working in partnership with the academic world insurers can encourage and shape valuable scientific research that can lead insurers to better identify and manage risk.”
2011 Science of Risk Judges
Trevor Maynard, Head of Exposure Management and Reinsurance, Lloyd’s
Jerome Kirk, Head of Actuarial Services, Lloyd’s
Dorian Blake, Head of Underwriting Discipline, QBE
Dr Dougal Goodman, CEO of The Foundation for Science and Technology
Dr Steven Wilson, CEO, Natural Environment Research Council (NERC)
James Orr, Chief Acturary, General insurance, Financial Services Authority
Professor Simon Pollard, Head of Department, Environmental Science and Technology, Cranfield University