27 Jun

Company Spotlight: Moody’s RMS












By Chiara Ryals

In an era of rapidly changing environmental conditions, understanding and predicting catastrophic events is more crucial than ever. With nearly 30 years at Moody’s RMS, David Carttar, the company’s Senior Director of Geospatial Development, has witnessed the evolution of risk modeling that has improved global responses to fluctuating risks. By maintaining an accurate global base map covering a vast array of natural hazards, Moody’s RMS ensures that companies can measure their risk against anything from forest fires to pandemic illness. 

In June, we had the pleasure of interviewing Mr. Carttar, who is able to pinpoint the exact location where his fascination with geography began. During an undergraduate class at the University of Kansas, his professor brought the class out to his farm, where he asked the students to triangulate their location using maps. It was that day that Mr. Carttar realized the power of geography to synthesize and communicate information from the real world. This passion naturally extended to Geographic Information Systems, which attracted him through their power to handle large quantities of information to solve spatial problems.


Moody’s Goal

Now at Moody’s RMS, Mr. Carttar applies geography to quantify risk and facilitate informed decision-making in property and casualty insurance, particularly related to natural disasters. He cites Hurricane Andrew in 1992 and the Northridge Earthquake in 1994 as early examples of why risk modeling is so necessary, explaining how after these catastrophic events, a lot of insurance companies went out of business because the historical record  didn’t offer  enough information to understand long-term risk. As a result, companies underpriced policies  and underinsured themselves, ultimately leading to their bankruptcy. Moody’s RMS aims to prevent such outcomes by developing probabilistic models to help insurance companies price their policies accurately and diversify risk, ensuring stronger financial stability.

Over the years, the company’s mission has remained the same. Moody’s RMS stands out in its enduring vision to make every risk known and understood, fostering resilience through high-quality information. To ensure accuracy in this information, Mr. Carttar’s role includes maintaining a global base map and designing geocoding capabilities, which is crucial for matching client property data to risk models. Mr. Carttar emphasizes the importance of addresses as a tool which provides the intersection of insurance and the physical properties being insured.


Importance of Geocoding 

Geocoding, a critical yet historically overlooked aspect of geospatial analysis, involves the process of converting addresses into geographic coordinates. It transforms the complexity of human-devised address systems into reliable, repeatable procedures essential for modeling accuracy. The process of geocoding is made even more challenging by the variability in address formats around the world. Mr. Carttar gave the Colombian system as an example, where addresses are based on the nearest cross street and the distance from it, rather than a sequential number system. Mr. Carttar finds joy in the “messiness” that comes from varying systems around the world, drawing on his background in human geography to understand them. His work is vital in ensuring that all other scientific data, such as natural hazard models, are accurately aligned with the real-world locations they pertain to.

Maintaining their own geocoder, Moody’s RMS balances  precision and accuracy in their geospatial analysis, supporting sophisticated modeling capabilities. The company operates on the principle that to understand a risk, you must know where it is. This involves maintaining geocoding technology that covers their needs, as commercial solutions often withhold the metadata required to support accurate analyses across multiple geographic levels. Moody’s RMS integrates detailed geocoding capabilities with advanced modeling technologies, allowing them to understand and quantify varied risks more effectively. To gain a deeper understanding of the risk in question, Moody’s attempts to expose hidden relationships between variables like local geophysical conditions and typical building practices. 


Moody’s Projects

Mr. Carttar’s first cartographic publication with Moody’s RMS was in collaboration with National Geographic that mapped multi-parallel risks, including earthquakes, hurricanes, tornados, and hail. The team used an insurance concept called average annual loss, which represents the amount of property loss on an annual basis by the given perils. This concept allowed the team to convert a wide range of perils into a single, mappable currency, paving the way for a series of similar risk maps that have served as valuable tools in illustrating risks around the world.

Moody’s RMS has continued to evolve with changing times. In the wake of 9/11, the company recognized significant gaps in the way businesses assessed risks confined within four walls. This realization led to groundbreaking work that could precisely measure risks even in densely populated urban centers like New York City, where a single building might have four to six distinct addresses. Moody’s RMS developed an enhanced risk assessment methodology that measured perils at the building level, a pioneering approach that significantly improved the precision of risk evaluations in commercial areas.


Messages to Geographers

Key to the success of these projects was the interdisciplinary collaboration in risk models. All of these projects were made possible through collaboration between software engineers, atmospheric and earth scientists, structural engineers, financial experts and others, who all needed to develop a common language across their skill sets to solve a problem. For geographers, Mr. Carttar recommends learning to code, which finds a common language in a literal sense. Coding not only automates analyses, allowing for the creation of more complex models than manual methods could achieve, but it also bridges communication gaps, facilitating enhanced collaboration between geographers and programmers.

When asked what technological advances he was most excited about in the geospatial field, Mr. Carttar anticipates an enhanced ability to process huge amounts of information. In the field of risk modeling, automated models that can analyze scenarios with thousands of variations will enable more informed answers to an extent that was not possible at the start of his career. While excited about AI’s potential in pattern recognition within modeled outcomes, he cautions against over-reliance on seductive technologies without an understanding of foundational principles. He advises that those with an interest in geography begin by learning how to think geospatially. Understanding “cause and effect over space” provides a strong starting point for all else and can make meaning from the information given by a computer. As someone who firstly described himself as a geographer above all, this guiding principle has evidently taken Mr. Carttar far in his career.

This principle has been integral to achieving the RMS mission over the past 30 years: contributing to a more resilient and informed world. While human activity has influenced risk, particularly in the area of climate change, risks often exist independently of human actions. Therefore, the goal of the company has remained consistent. Even as technology evolves, the importance of geospatial thinking and interdisciplinary collaboration will remain crucial. Moody’s RMS has adapted using these principles to understand every risk as deeply as possible, continuously embodying its mission in an ever-changing world.