How Ambiental Risk Analytics Is Mastering Environmental Risk Data for Protection against Australian Flood Events

How Ambiental Risk Analytics Is Mastering Environmental Risk Data for Protection against Australian Flood Events

Ambiental Risk Analytics, a global provider of environmental risk data used to protect people, property and capital from flooding and climate change, recently launched its enhanced flood model Australia FloodCat™. The company, which is one of the model providers for Nasdaq Risk Modelling for Catastrophes, rolled out the enhanced model shortly after Nasdaq upgraded its risk modelling service.  We interviewed Ambiental Chief Executive Officer Dr. Justin Butler to find out more about the model, the company’s plans for the future and becoming more resilient to flooding.

Can you please tell us a bit about Ambiental?

Ambiental Risk Analytics serves many of the world’s leading insurers with risk data, and have long been held in high esteem by the industry for our specialist expertise and focus on accuracy in the field of flood modelling and flood risk analytics. We also have years’ of experience working within the finance and real estate sectors, national and local governments, and utility companies – where we use predictive analytics, digital mapping and machine learning to create knowledge from data.

What are the innovative aspects of your recently launched risk model Australia FloodCat?

Australia is a huge country, and this means that modelling it to a high level of precision and accuracy becomes a considerable undertaking. Over nearly a decade, Ambiental has sourced the best available input data to form our base flood hazard maps. We have also invested in computational power and algorithmic efficiency to enable simulation of floods from multiple sources with very high degrees of realism over huge spatial domains. Scalability is key, and we use the latest LiDAR Digital Terrain Models and the best available science to constrain the uncertainty in our hazard models. We also form our view of risk from property level exposure data (address points and building outlines), which is extremely important because flood hazard is very location-specific. The detailed view of flood hazard from our Australia FloodMap is maintained within our FloodScore risk database, which is, in turn, used to form the hazard component of our FloodCat fully probabilistic model. This enables a consistent and easily interpretable view of flood risk in the territory, especially when the products are used in conjunction.

What trends are you seeing as a supplier of risk models to the re/insurance industry?

I think the market is becoming less entrenched in traditional modes of working and is starting to realize the benefits of greater transparency in catastrophic risk analysis. Model vendors have done well to demonstrate the benefits of having more detailed models, as opposed to poor models or no models at all. Our insurance clients are noticing loss reductions through adjustments they have made to their view of risk ahead of flood disasters. The industry has struggled with logistical and operational challenges around implementing new catastrophe modelling platforms and procuring best of breed models. With solutions like Nasdaq Risk Modelling, the barrier to market entry is being overcome by providing a ready-to-use multi-vendor platform offered as a service with many leading industry models available for rapid deployment. Our goal has always been to help our customers reduce risk and costs, while growing their market share within new and existing territories. In line with this, our partnership with Nasdaq considerably simplifies the model distribution and adoption processes for vendors and end-users alike.

What is the flood risk situation for Australia, and what can be done to manage this risk in the future?

Despite having a hot and dry interior, Australia is a country that experiences frequent extreme flooding. Cyclonic systems often bring heavy rains, when very high levels of moisture are brought inland from the ocean and are a major cause of floods, particularly in coastal areas of Queensland and New South Wales. Because this is where much of the population is located, the impact of floods can be severe. In the headwaters of large rivers, and where river gradients are steepest, rapid onset flooding, where flows are exceptionally high, has produced some of the biggest losses in Australia when towns and cities in the East and South of Australia and Tasmania are affected. Flash flooding, otherwise known as ‘pluvial,’ is often driven by severe thunderstorms, which produce short bursts of intense rainfall that can happen almost anywhere in the country. In cases where drainage systems are overwhelmed in urban areas, or as a result of low soil permeability in rural areas, the impact on people and property from pluvial flooding can be particularly severe and concentrated. In the expansive flat interior of Australia, floods can spread over thousands of square kilometers and may last for several weeks. In mountain and coastal regions, flooding can happen very rapidly, often with only a few hours warning.

Significant catastrophic events have occurred. The cost of the January 2011 flooding in Lockyer, Ipswich and Brisbane was A$6.64 billion. The average direct annual cost of flooding is estimated to be A$943 million (based on data between 1967 and 2013, excluding the cost of deaths and injuries). Recent years have seen losses that notably exceed the cost of Townsville flooding in 2018, which had property damage insurance losses of A$1.24 billion. There is a growing and urgent need to understand how climate change is affecting hydrology now as well as in the future, along with the consequences that this will have upon extreme flooding. 

With Ambiental FloodFutures®, we have built new kinds of flood maps, informed by climate models and show a range of likely scenarios. We plan to use this modelling approach in Australia. Unfortunately, it is inevitable that damaging floods will occur again in the future, so further risk reductions need to be achieved through better flood forecasting and live impact analysis. This enables a more effective disaster response that protects people and property, and thus lowers event losses. Ambiental FloodWatch® has been developed for Australia and our forecasting technology is already being used to predict floods on the Parramatta River near Sydney. By using these digital tools, society can adapt and become more resilient to flooding.

Ambiental Risk Analytics Tower Shot



Nasdaq’s Marketinsite offers actionable insights on a variety of market-moving topics. Learn from our thought leaders who are driving the capital markets of tomorrow.

Read MarketInsite's Bio