Insurance Brokerage Company uses a computer-based method of estimating the losses its clients will suffer if a severe storm or earthquake occurs.

This method of estimating losses is called :

A)capital budgeting.

B)securitization of risk.

C) risk mapping.

D) catastrophe modeling

Catastrophe modeling(D)

Explanation:

Catastrophe modeling also called cat modelling is the means of using computer assisted calculations to evaluate the losses that could occur as a result of a disastrous event such as a earthquake or hurricane. It is mainly relevant in insurance industries to get information about the worth of their exposed assets.

Catastrophe modeling is useful in the optimization of portfolios and better decision making. It estimates the intensity and magnitude of the event to ascertain the amount of damage done, before computing the amount of loss incurred as a result of each catastrophic event.

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