Managing Climate Change Risk With Modeling (Risk Management Magazine)

Managing Climate Change Risk With Modeling

Friday, March 10th, 2023 Insurance Industry

Climate change and its long-term implications have a serious and tangible impact on companies. According to NOAA’s National Centers for Environmental Information, the United States alone has sustained 341 weather and climate disasters since 1980 in which total damages reached at least $1 billion. The total cost of these disasters was $2.475 trillion.

As the severity of the climate crisis intensifies, companies are becoming more susceptible to vulnerabilities including physical risks arising from extreme weather events, technology threats, global market and economic uncertainty, and brand/reputational risks.

These issues are of significant concern for the insurance industry, whose purpose is centered around pooling and managing risks.

The industry is facing an immense amount of pressure across stakeholders, from employees and customers to regulators and investors, to take proactive steps to mitigate and help the world adapt to the impacts of climate change.

This is a major challenge for insurers -- according to a PwC study, 85% of global insurers believe environmental, social and governance (ESG) will impact all functions of their business.

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External References & Further Reading

Mid-America Catastrophe ServicesMid-America Catastrophe ServicesNationwide OversprayHancock Claims Consultants LLC

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