Exam 6C Practice Question 21
Study guide: Exam 6C
OSFI's Guideline B-15, Climate Risk Management, groups climate-related risks into physical risks (acute and chronic) and transition risks, and notes that both can also lead to liability risks. A federally regulated P&C insurer is reviewing its exposures.
Match each exposure to the category of climate-related risk that best describes it. An option may be used more than once or not at all.
Part a (1 point)
New federal emissions regulation lowers the market value of the insurer's bond holdings in carbon-intensive issuers.
- A) Acute physical risk
- B) Chronic physical risk
- C) Transition risk
- D) Liability risk
Part b (1 point)
An unusually severe wildfire season produces a spike in homeowners claims.
- A) Acute physical risk
- B) Chronic physical risk
- C) Transition risk
- D) Liability risk
Part c (1 point)
Corporate policyholders face lawsuits alleging they failed to manage their climate-related risks, and they claim under their liability policies.
- A) Acute physical risk
- B) Chronic physical risk
- C) Transition risk
- D) Liability risk
Part d (1 point)
Over decades, rising sea levels gradually raise expected flood losses along the coast where much of its property book is located.
- A) Acute physical risk
- B) Chronic physical risk
- C) Transition risk
- D) Liability risk
Answer this question and see the worked solution