Risk analysis can be enhanced by unconventional methods like studying California wildfires through film footage to improve data accuracy. One unique model incorporates principles from airplane physics to analyze the probability of catastrophe against potential losses and profit at different risk levels. By comparing these curves to the cross-section of a wing, the analyst can apply principles of lift physics to calculate risk and reward accurately.
Today on the Big Take podcast, we visit the hedge fund with one of the world’s largest collections of catastrophe bonds, Fermat Capital Management, to see how they place their bets to get record returns. And we hear how the growing industry is helping fill a need in the global insurance market.
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