International Actuarial Association releases fourth paper in climate risk series

The International Actuarial Association (IAA) has released the fourth paper in its climate series, entitled Application of Climate-Related Risk Scenarios to Asset Portfolios.

It was prepared by a team of actuaries from Canada, the Netherlands, the US, the UK and Singapore under the direction of the IAA’s Climate Risk Task Force (CRTF). Earlier papers in the series include Importance of Climate-Related Risks for Actuaries, Introduction to Climate-Related Scenarios and Climate-Related Scenarios Applied to Insurers and Other Financial Institutions.

The focus of this paper is the assessment and projection of asset cash flows and market values, taking into account climate-related risks to be incorporated in the analyses and reports provided by actuaries. It describes the scenarios and pathways available to actuaries to support work in integrating climate-related risks into the measurement and management of asset portfolios, ‘bottom up’ and ‘top down’ approaches, specific consideration of risks by asset class (e.g. bonds, equities, etc.), green taxonomies, risk measures and metrics.

The CTRF will host a webinar on 26 April 2022 at 10:00PM AEST to present this paper. To register for the webinar, please click here.

The CRTF has been very active recently, also issuing a significant report in conjunction with the International Panel on Climate Change (IPCC) entitled Climate Science: A Summary for Actuaries – What the IPCC Climate Change Report 2021 Means for the Actuarial Profession. Two more papers in the series are planned for release in 2022, on climate risk disclosure and adaptation.

The Actuaries Institute has supported the activities of the CRTF through volunteers Rade Musulin and Fred Rowley. The Institute has also provided authors, peer review and feedback on prior papers.

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