Actuarial Notes

Importance of Climate-Related Risks for Actuaries

By Stuart Wason, Nicholas Dexter, Tim Furlan, Tatjana Miljkovic and Philip Shier · International Actuarial Association · 2020 · CP312-113-26

Study guide: Exam CP-312

A paper by the Climate Risk Task Force of the International Actuarial Association, dated September 2020. It examines the categories of climate-related risks and their importance for actuaries in identifying, measuring, managing and reporting this type of risk. It reviews their impact on actuarial work under five broad categories: actuarial modelling, product management, risk and capital management, investment management, and disclosure.

On the syllabus

  • Exam CP-312 — CP312-113-26: Importance of Climate-Related Risks for Actuaries, for outcome 2a (Topic 2).

Executive Summary

1 Introduction

  • 1.1 Importance and Key Evidence
  • 1.2 Why Actuaries Should Care
  • 1.3 Current Initiatives within the Actuarial Community
  • 1.4 Organization of this Paper

2 Climate-Related Risks

  • 2.1 Physical Risks
  • 2.2 Transition Risks
  • 2.3 Legal and Reputation Risks

3 Actuarial Modelling

  • 3.1 Investment Assumptions
  • 3.2 Mortality and Morbidity Assumptions
  • 3.3 General Insurance Claims Assumptions

4 Product Management

5 Risk and Capital Management

  • 5.1 Enterprise Risk Management (ERM) Frameworks
  • 5.2 Capital Adequacy
  • 5.3 Relationship with the Pension Fund Sponsor

6 Investment Management

7 Disclosure

8 Implications for Actuaries

9 Next Steps

Appendix Global Capital Market Initiatives Linked to Climate-Related Risks

Sources