To help your understanding of how climate-related risk plays a role in the work of actuaries, the IFoA’s Actuarial Review Team has completed an information-gathering exercise.
The report, Climate-related risk: An information-gathering report on actuarial involvement (bit.ly/IFoA_AMSPubs) concluded that, in many organisations, actuaries are among those leading the thinking on climate-related risk. The key areas of work carried out by actuaries are scenario modelling and stress testing, as well as working alongside others in asset management.
The report’s author, senior review actuary David Gordon, commented: “Carrying out this exercise in 2021 in the run-up to COP26 has enabled us to capture the change of pace in many organisations to their approach to climate-related risk, as pension funds and insurers increase their activities in response to both an increased understanding of the risks and the evolving regulatory landscape.”
However, there is more limited consideration of climate-related risk in many significant areas of actuarial work (for example valuation, reserving and capital work), where actuaries commented that it was not clear what impact it currently has. Neil Buckley, chair of the Regulatory Board, welcomed the report, encouraging all IFoA members to “consider climate-related risk appropriately in the work they do, and where necessary reflect on any development needs to help them do this effectively”.