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🌪️ '''RMS''' — now operating as Moody's RMS following its acquisition by Moody's Corporation — is one of the insurance industry's leading [[Definition:Catastrophe modeling | catastrophe modeling]] firms, providing the risk models, analytics, and data platforms that [[Definition:Insurance carrier | insurers]], [[Definition:Reinsurer | reinsurers]], [[Definition:Insurance broker | brokers]], and [[Definition:Capital markets | capital markets]] participants use to quantify potential losses from natural and man-made catastrophes. Originally founded as Risk Management Solutions, the company's models cover perils ranging from [[Definition:Hurricane | hurricanes]] and [[Definition:Earthquake | earthquakes]] to [[Definition:Flood | floods]], [[Definition:Wildfire | wildfires]], [[Definition:Cyber risk | cyber risk]], and [[Definition:Pandemic | pandemic]] events.

⚙️ At the heart of RMS's offering are stochastic event sets — enormous libraries of simulated catastrophe scenarios generated from scientific and engineering research — combined with vulnerability functions that estimate damage to exposed properties and financial modules that translate physical damage into insured [[Definition:Loss | losses]]. [[Definition:Underwriter | Underwriters]] and [[Definition:Actuary | actuaries]] feed [[Definition:Exposure | exposure]] data into these models to estimate metrics like [[Definition:Probable maximum loss (PML) | probable maximum loss]], [[Definition:Average annual loss (AAL) | average annual loss]], and [[Definition:Tail value at risk (TVaR) | tail value at risk]]. RMS also provides its Intelligent Risk Platform (IRP), a cloud-native environment designed to run models at scale and integrate with carriers' [[Definition:Policy administration system | policy administration]] and [[Definition:Enterprise risk management (ERM) | enterprise risk management]] systems. Model version updates — which can materially change estimated losses for an entire peril region — are closely watched events that ripple through [[Definition:Reinsurance | reinsurance]] pricing negotiations and [[Definition:Insurance-linked securities (ILS) | ILS]] structuring.

💡 RMS's influence on the insurance market is difficult to overstate. The models it produces are embedded in virtually every stage of the [[Definition:Risk transfer | risk transfer]] chain: [[Definition:Insurance carrier | primary carriers]] use them to set [[Definition:Rate | rates]] and manage [[Definition:Aggregation | aggregate]] exposures, [[Definition:Reinsurer | reinsurers]] rely on them to price [[Definition:Treaty reinsurance | treaties]] and [[Definition:Facultative reinsurance | facultative]] placements, and [[Definition:Insurance-linked securities (ILS) | ILS]] investors use them to evaluate [[Definition:Catastrophe bond | catastrophe bonds]] and [[Definition:Collateralized reinsurance | collateralized reinsurance]] structures. Because RMS, [[Definition:AIR Worldwide | AIR Worldwide]], and a small number of other vendors dominate the cat-modeling space, their methodological choices effectively shape how billions of dollars of [[Definition:Capital | capital]] are deployed. This concentration has drawn attention from regulators and industry groups, who encourage carriers to understand model limitations and supplement vendor output with proprietary analysis.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Catastrophe modeling]]
* [[Definition:AIR Worldwide]]
* [[Definition:Probable maximum loss (PML)]]
* [[Definition:Average annual loss (AAL)]]
* [[Definition:Insurance-linked securities (ILS)]]
* [[Definition:Exposure management]]
{{Div col end}}

Definition:RMS - Revision history

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