# Location AAL Metrics

Evaluate the relative vulnerability of location exposures with location AAL statistics

# Overview

Location AAL statistics let you compare the relative vulnerability of location exposures. Using the Get location AAL statistics service, you can retrieve average annual loss (AAL), coefficient of variation (CV), and standard deviation statistics for modeled location exposures.

In this tutorial we will analyze a portfolio and retrieve location AAL statistics to review the vulnerability of location exposures belonging to that particular portfolio.

# Step 1: Analyze location exposures

Catastrophe modeling is the process of using computer-assisted calculations to estimate the vulnerability of exposures.

Location AAL statistics are generally used to evaluate location exposures within a portfolio. Our first step is to analyze a portfolio using a DLM or HD model. Upon completion, the analysis job saves the results of this analysis to a cloud-based RDM.

For an overview of catastrophe modeling using Risk Modeler 2.0 APIs, see Introduction to Catastrophe Modeling.

# Step 2: Retrieve location AAL statistics

The Get location AAL by analysis result service returns location AAL statistics including the average annual loss, coefficient of variation, and standard deviation for one or more locations. The analysis ID must be specified in the endpoint path.

```
curl --request GET \
--url 'https://api-euw1.rms.com/riskmodeler/v2/analyses/453/location-aal?perspective=GR&sort=AAL%20DESC&limit=100&offset=0' \
--header 'Accept: application/json' \
--header 'Authorization: XXXXXXXXXX'
```

The required `perspective`

query parameter identifies the financial perspective that represents a particular view of risk. In the example, we are retrieving results for the gross loss (`GR`

) perspective. The service also supports the `FA`

(facultative reinsurance loss), `GU`

(ground up loss), `QS`

(quota share loss), `RG`

(reinsurance gross loss), `RL`

(net loss cat), `RN`

(reinsurance net loss), `SS`

(surplus share loss), and `WX`

(working excess loss) values.

The `sort`

query parameter enables you to compare location AAL metrics returned for each location exposure so that you may identify location exposures at the greatest risk. By default, metrics returned by this service are sorted by `aal`

attribute in descending order. You can use the `sort`

query parameter to sort on any column in either ascending or descending order.

The service accepts query parameters that enable you to paginate the records returned. To learn more about Risk Modeler 2.0 query filters, see Query Exposure data.

# Step 3: Review location AAL statistics

A successful response returns AAL metrics for all of the location exposures belonging to the portfolio.

For each location exposure, the response returns the `locationId`

, `locationName`

, `locationNumber`

, `aal`

, `coefficientOfVariation`

, and `standardDeviation`

.

```
{ "totalCount": 2,
"offset": 0,
"limit": 100,
"locationAALs": [
{
"locationId": 58,
"locationName": "Location_Name",
"locationNumber": "Location_Num",
"aal": 294.25022798552993,
"coefficientOfVariation": 5.652179067641994,
"standardDeviation": 1663.1549792686967
},
{
"locationId": 60,
"locationName": "Location_Name",
"locationNumber": "Location_Num",
"aal": 274.25022798662993,
"coefficientOfVariation": 6.62779067641994,
"standardDeviation": 1234.1549792686967
},
...
]
}
```

The service returns the average annual loss (AAL), coefficient of variation (CV), and standard deviation statistics for modeled location exposures. Using these statistics, underwriters can identify the location exposures in their portfolios that are at the greatest risk.

- The
`aal`

attribute identifies the average annual loss (AAL) for the location exposure, i.e. the expected value of the modeled loss distribution. The AAL represents the loss one would expect to see in a year on average. Since the AAL represents only an average, the actual annual losses will fluctuate around the AAL in any given year. AAL does not include expenses, non-modeled loss, profit, or risk load. One may be interested in AAL for ground-up (`GU`

), gross (`GR`

), net of reinsurance (`RN`

), or other views of risk. - The
`coefficientOfVariation`

attribute identifies the coefficient of variation (CV) for a location exposure. For exceedance probability (EP) analyses, this metric measures of the relationship between the pure premium (AAL) and the standard deviation of the annual losses and reflects the volatility in the annual losses. It is calculated by dividing standard deviation of the annual losses by pure premium. CV provides a comparative basis for assessing diversification of risk and compares volatility across analyses, such as between portfolios. - The
`standardDeviation`

attribute identifies the standard deviation of a mean loss value for a location exposure. This metric characterizes the uncertainty in an event loss. The correlated standard deviation for a portfolio assumes that all locations are completely correlated, which implies that if the losses are large for one correlation, they are likely to be large for the other location.The independent standard deviation for a portfolio assumes that all locations are completely independent, which means that knowing the size of the loss at one location does not provide any information about the size of the loss at the other location. Portfolio standard deviation is calculated as a weighted average of these two extreme cases.

Updated 5 months ago