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Former AIR exec opens consulting company

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BOSTON—Catastrophe modeling pioneer Karen Clark has opened an independent risk management consulting practice to help companies better understand how to use catastrophe models in their risk management decision-making.

The firm, Karen Clark & Co., is based in Boston.

Ms. Clark began developing a simulation model to estimate property losses from hurricanes in 1983 as an insurance company research associate. Her original model, unveiled in 1986, became the basis for the hurricane model on which she launched catastrophe modeler AIR Worldwide Corp. the following year. Ms. Clark left AIR, which now has hundreds of clients in dozens of countries, as president and chief executive officer in April.

To manage their catastrophe risks, however, companies need more than to choose from among the many catastrophe models that now are available, Ms. Clark said in a statement.

"While the catastrophe models and applications will continue to evolve and improve over time, the bigger challenges now are in helping companies get full value from these tools," said Ms. Clark, president and CEO of the new catastrophe consultant.

"Senior executives and directors of companies exposed to catastrophes realize they need independent information about catastrophe risk and best practices for managing that risk, because every year the financial exposure to catastrophe loss increases. Companies have asked me for more insight, so I am very excited to be taking on these new challenges and working with industry leaders to develop more effective and holistic risk management processes," Ms. Clark said.

Among the issues that the new consultant plans to clarify for clients are the reasons why results differ significantly among various catastrophe models and why models change; how to test reliability of model input and output; and the pitfalls to avoid in using models for certain purposes, such as portfolio optimization.