Even when you are in the business of risk modelling and looking at all manner of potential perils, there are some concerns that overshadow others.Whether you call it climate change, extreme weather events, or simply a “mega catastrophe” of the $400 billion insured loss variety hypothesised by Warren Buffett, the likelihood of such things disrupting the insurance sector is a concern for Karen White.She is chief executive officer of RMS, a catastrophe risk modelling company with offices around the world, including in Bermuda.Speaking from California, which has been enduring a spate of major wildfires threatening homes and properties, Ms White said she is concerned by “pop-up losses” such as those that hit the insurance world in 2017 and 2018. They included the deadly Camp Fire in California, and hurricanes Harvey, Irma, Maria, Michael and Florence. She is worried the insurance market might reach a stage where it no longer attracts the capital needed to properly cover such disastrous events.“There is a risk that at some point someone will lay down the gauntlet and say you need to show more capital than you do now,” she said, or that capital requirements will be looked at in a different way owing to these significant loss events.Advances in technology are increasingly seen as part of the way forward for the insurance industry, helping lower costs, increase efficiencies and fine-tune the accuracy of risk assessments.But technology alone is no panacea.“I love some of the stuff going on in the insurtech space, it is cool. But by and large there is quite a bit of roadkill,” Ms White said, referring to investments in companies that are dying.Technology and data must be paired with other things.She said you must firstly have the data, secondly you must know what to do with it, and thirdly know how you can build new analytics against that data.“You can’t just come out with an understanding of the tech. The pillars you need are a deep understanding of the problems of the industry, a deep appreciation for the regulatory environment that we operate in, and then you have to be incredibly innovative and tech-savvy.”Ms White has a 30-year background in the world of technology, starting in 1993 as a senior executive at Oracle reporting to CEO Larry Ellison.“At the time, we were going from client-server computing to internet computing — and the world has never gone back,” she said.RMS is applying its risk model science to provide “sophisticated midterm rates” and the impact of extreme weather events.Ms White said it is also looking beyond model science to the “vast ability” to collect more and more exposure and hazard data in the cloud that can be “crunched in brand new ways”.She said: “One of the principals of data analytics is you have to get the data out of the silo and into a place where you can begin to see correlations that you could not see before. The computational ability in the cloud allows you to do that.“Getting that data in a place and in a way where it can be leveraged by all these other advances in innovation and science to get to their outcomes, whether it is wildfires, hurricanes or climate change.”RMS has started an artificial intelligence machine-learning team in the Seattle area, with staff that include experts involved in the machine-learning server for Microsoft, and Alexa for Amazon, together with “a brilliant team of AI experts”.Ms White said: “In the future we are going to have these rich data models with granular-level data and risk models. And we are going to have machine-learning models available to our customers. We are marching down that path to harness all that is there.”She recognised that the insurance industry, because it is highly regulated, tends to move more slowly when it comes to innovation.“There comes a time in an industry where the market dynamics are saying ‘okay, time to change — time to do something new,’” she said. “It’s not ‘gun to head [and change], or else you’re dead tomorrow’ because the industry is regulated, and regulated industries move more slowly.”But the market dynamics, the losses of the last two years, the impact of climate change, and the new emerging risks are posing problems for the insurance industry and how it copes with them, she said.“It is only possible if the technology evolves, so right now you see a lot of market dynamics in terms of cost pressure and M&A events affecting businesses enormously.“You can start to harness technology to tackle those dynamics in the market that are giving us headwind, and when those things come together that’s when transformation occurs.“We are at a moment in the industry where the companies that are starting to harness this sooner than the others are reaping more rewards. The guys that are optimising for costs, harnessing technology, they are better by 100 per cent on a cost basis.”Cloud computing and AI are not only a first step in cost and operating efficiencies, but also in understanding risks better, Ms White said.She will be a guest speaker at the PwC Insurance Summit being held at the Hamilton Princess & Beach Club on Thursday.The event, which is presented by the Financial Times and PwC, also features among the speakers Brian Duperreault, CEO of American International Group, and Robert Childs, chairman of Hiscox.Ms White said: “I’m going to be talking about innovation and the future of risk — how these things can unfold and what timing they incur in the market.”She said that during her career she has witnessed what happens when you are “at that vortex where an industry is needing to change the dynamics of the market, and technology has come along to support that and be harnessed”.She added: “I look at the waves of change that have occurred, and I do think we are at that moment in the insurance industry. The market dynamics are quite complex, and the technology has evolved to the point where it can be harnessed.“I’m going to be talking about some of those scenarios and how it might play forward for us.”