Projects to help the Australian economy deal with the impacts of climate change and other catastrophic events have secured funding in the latest round of Australian Research Council (ARC) grant awards.

Two UNSW Business School projects received over $600,000 in the ARC Discovery Project scheme announced on Wednesday by Minister for Education Dan Tehan. In total, 72 UNSW projects received $30.8 million in funding.

UNSW Business School researchers Professor Qihe Tang, Associate Professor Bernard Wong and Associate Professor Benjamin Avanzi will receive $310,000 towards one project that will help insurance companies better understand and manage catastrophe risk.

Catastrophes – both natural and man-made – produce widespread destruction of the environment, economy and society. This includes bushfires, floods, droughts, financial crises, wars and cyber-attacks.

Professor Tang, who is one of the University’s Strategic Hires and Retention Pathways (SHARP) researchers, says recent decades have seen a surge in the frequency and severity of catastrophes. With the right tools, insurers can minimise the economic impact for households and businesses.

"Australia is vulnerable to catastrophes like the recent bushfires," said Professor Tang. "If not managed well, these events can significantly alter the financial landscape of the insurance industry. This not only impacts the affordability of insurance, but in turn, economic growth, employment and the credit risk of affected households and businesses."

Professor Tang’s research will take a highly interdisciplinary approach, drawing on a number of subject areas to solve the problem, including extreme value theory, statistics, operations research, actuarial studies, and finance.

"The research is quite new. People have talked about it – now we want to provide tangible solutions," said Professor Tang. "The end-product of this three-year project will be a comprehensive system of catastrophe risk management. This will improve business decision-making in general, helping provide insights to researchers, practitioners and regulators in insurance."

UNSW Associate Professor Jae Kyung Woo and Associate Professor Eric Cheung will receive $334,000 to develop analytical tools to help insurers assess risk. Associate Professor Woo’s work will utilise data from the Actuary Climate Index, determine how often these events occur and quantify the expected losses for insurance and reinsurance companies.

"Some insurers around the world face bankruptcy because it’s very difficult for them to calculate the likelihood of ‘loss events’," she said.

"If insurers understand the risks or likelihood of these events, they can better equip themselves to handle claims and support those who are worst affected. Our tools will help them manage their capital more effectively so they can get help to those who need it urgently."

UNSW Associate Professor Gemma Carey is a member of another team who has received $336,532 to research ‘Making policy reform work: a comparative analysis of social procurement’. Hosted by Swinburne University of Technology, the project aims to clarify the institutional and cross-sectoral conditions needed for successful implementation of emerging social procurement policy reforms; these seek, through public spending, to increase employment and business opportunities for people experiencing social exclusion.

The ARC Discovery Project announcement follows the UNSW Business School’s recent success in the ARC Discovery Early Career Research Awards, including for risk and actuarial academic Dr Yang Shen.