CoMeta's redesigned underwriting feature now has a score for every company exposed to every emerging risk.
- New company risk score feature distilling a company's complex exposure to emerging risk down to a single score
- Expansion of company inventory to more than 103,000 companies with updated firmographic and company link information
- Updated probabilistic liability catastrophe model reflecting recent developments in ongoing mass litigation events
The Company Risk Score
The company risk score, which ranges from 0 to 100, summarizes a company’s exposure to emerging risk and the potential legal liabilities those risks entail. The risk score is increasing in a company’s likelihood of being named in lawsuits alleging one or more emerging risks ("Litagion agents") caused plaintiffs' harm. A score of less than 20 (green) means the chance of future litigation for the company (measured over an eight-year forecast window) is less than one percent. The company might be exposed only to risks in the "emerging interest" phase of the emerging risk lifecycle when science is just beginning to develop around hypotheses of harm, or they could be exposed to more mature emerging risks but in a manner that implies negligible risk.
By contrast, a score of 80 or more (red) means the company is very likely to be exposed materially to one or more emerging risks that are the subject of ongoing litigation ("emerging litigation" risks). The likelihood plaintiffs file complaints against the company alleging harm from an emerging risk is high (typically greater than 50 percent). Indeed, the company might already have been sued. The average chance of litigation involving a company and profiled emerging risks is 2% between scores of 20-39, 11% between scores of 40-59, and 30% between scores of 60-79. The company risk score also increases in the estimated severity of litigation against the company were litigation to transpire as well as the number of emerging damage and emerging litigation agents to which it is exposed.
The company risk score is available in a redesigned underwriting feature accessible from the left-hand navigation bar. Click underwriting (1) and search for a company of interest. The search dialog displays the company risk score (2), where available, along with an indicator (3) for whether the company is exposed to emerging litigation risks. A company can be exposed to an emerging litigation Litagion agent and still have a relatively low company risk score if the manner in which the company is exposed to that Litagion agent does not convey material litigation risk to the company.
The company risk score is derived from Praedicat's probabilistic liability catastrophe model. The most recent version of that model is limited to 71 Litagion agents and 39,297 companies. Consequently, the company risk score is available only for companies that are among that group of 39,297 and have exposure to one or more of the 71 modeled Litagion agents. Companies outside of that set have either a score of zero, indicating they have no exposure to any profiled Litagion agent in CoMeta (265 Litagion agents as of this release), or a missing ("--") risk score indicating they have exposure to one or more Litagion agents, but no risk score is available because they either are not one of the 39,297 modeled companies or their only exposure lies outside the set of 71 modeled Litagion agents.
Selecting a company from the search dialogue brings you to the underwriting page for that company. Across the top of the page is a set of headline statistics (4) including the company risk score, chance of litigation for that company, and the number of Litagion agents that company is exposed to in the emerging interest (EI), emerging damage (ED), and emerging litigation (EL) phase of the emerging risk lifecycle. The headline area also displays ground-up loss statistics – expected loss and probable maximum loss at the the 5% and 1% exceedance levels – from Praedicat's liability catastrophe model. You then have the option to explore "risk score drivers" for the company or experiment with writing the company under different terms and conditions in the "underwriting workspace" (5).
The risk score drivers view shows how various Litagion agents and business activities contribute to the overall company risk score. The Litagion agent view (6) lists every Litagion agent linked to the company along with a component risk score (7) indicative of how risky the company would be if that were the only Litagion agent to which the company was exposed. The table also provides an indication of the chance of litigation conveyed by that Litagion agent alone and the severity of that litigation to the company were the litigation to commence. Additional statistics include the number of potential distinct mass litigation events the company could be named in – defined by a set of plaintiffs alleging a common harm via a common exposure against a common set of defendants – and the probability the company is in fact engaged in a commercial activity that exposes it to that litigation (a measure of Praedicat's confidence in its link between company and Litagion agent).
The business activity view (8) has the same structure as the Litagion agent view, but is cast in terms of the business activities that expose the company to emerging risk. The component risk score, chance of litigation, and severity index are shown as missing ("--") if the Litagion agent is not among the 71 currently modeled Litagion agents or a business activity is relevant only to Litagion agents outside that set.
Clicking on a Litagion agent name in the Litagion agent view shows the user which business activities expose the company to that Litagion agent (9). The standalone probabilistic loss output for that Litagion agent is displayed along with component risk score, chance of litigation, severity, number of potential mass litigation events, and link probability, by business activity.
Company Inventory Expansion
This release increases the number of profiled companies in CoMeta to 103,667. The expanded inventory covers all U.S.-domiciled companies with worldwide revenue of at least $40 million along with their corporate tree ancestors, regardless of where those ancestors are domiciled.
The expanded inventory also includes a set of companies (and their corporate tree ancestors) domiciled in Western European and Nordic countries selected because they operate in industries that could have material exposure to U.S. liability. This set of approximately 15,000 companies is restricted to companies with worldwide revenue of at least $100M.
Updated Probabilistic Liability Catastrophe Model
Praedicat's probabilistic liability catastrophe model has been updated with this release to reflect updated expectations for how ongoing bodily injury litigation involving perfluorooctanesulfonic acid (PFOS), perfluorooctanoic acid (PFOA), and glyphosate could evolve. Expected bodily injury indemnity and defense in PFOS, PFOA, and glyphosate litigation events now total $8.1, $14.7, and $21.2 billion, respectively. The one percent probable maximum loss for these litigation events now total $57.4 billion for glyphosate and $84.5 and $96.9 billion for PFOS and PFOA. Economy-wide ground-up loss estimates for all other modeled Litagion agents are unchanged. This model update also incorporates revisions in analyst assessments of links between companies and Litagion agents.
The updated probabilistic liability catastrophe model is available for account and portfolio underwriting in CoMeta and portfolio analysis in Oortfolio.