Publications

Climate Issues

Translations of certain IAA papers have been made by local member associations or members. The IAA has neither reviewed nor endorsed them. However, we are providing them on our website as a service to members.

  Climate-Related Scenarios Applied to Insurers and Other Financial Institutions - August 2021 - This paper is the third of a series of papers that will be developed, aimed at creating awareness and promoting actuarial approaches in climate-related risk management and reporting. The first paper Importance of Climate-Related Risks for Actuaries, and the second paper Introduction to Climate-Related Scenarios were released in September 2020 and February 2021 respectively.

This third paper continues the discussion begun in the second paper in the series, by considering as a starting point the process of using scenarios at the level of an individual insurer or other financial institution at the national level.  It examines the challenges faced by actuaries in implementing scenario analysis for climate-related risks and outlines a range of possible approaches. 

Three simplified case studies are included to illustrate the concepts developed in this paper. These case studies have been chosen to stimulate broad thinking rather than to focus on an approach taken by a specific financial institution or for specific blocks of business. It is hoped this paper can assist actuaries and others to understand the building blocks of climate-related scenarios and how they can be used to inform many critical risk management functions surrounding climate-related risks. 
Glossary of Defined Terms Used in IAA Climate-Related Risk Publications

Webinar held on September 29, 2021

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  Introduction to Climate-Related Scenarios - February 2021 - This paper is the second of a series of papers that will be developed, aimed at creating awareness and promoting actuarial approaches in climate-related risk management and reporting. The first paper - Importance of Climate-Related Risks for Actuaries – was released in September 2020.

This second paper aims to provide background covering the principles and outlining the processes for developing climate-related scenarios. It focuses on climate-related financial risks but does not cover the scientific basis of climate change beyond what is necessary for understanding its impacts. It aims to help actuaries and risk managers to acquire the basic vocabulary of climate science. It particularly serves those less familiar with the details of climate research who wish to develop or use climate-related scenarios.

The paper provides helpful insights into the requirements for good scenario analysis, components from which scenarios can be assembled, and considers some of the tools available to actuaries. It reviews the challenges and barriers that need to be considered in the development or use of workable climate-related scenarios and how those barriers may impact planning and implementation of adaptation actions and building resilience.

 Glossary of Defined Terms Used in IAA Climate-Related Risk Publications

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  Importance of Climate-Related Risks for Actuaries - September 2020 - Climate-related risk has the potential to seriously affect the entire world. The degree and timing of upcoming changes in our climate involve a great deal of uncertainty, creating widespread concern about its recent and potential impacts under alternative possible scenarios. Even if the most severe climate-related risk scenarios do not materialize, many financial institutions and most individuals will nevertheless be affected. A range of effects is now being actively considered by governments, regulators, the insurance and reinsurance industries, pension plans and other entities.

This paper is the first of a series of papers aimed at creating awareness and promoting actuarial approaches in climate-related risk management and reporting.

This first paper discusses the main components of the climate-related risks relevant to actuaries, their implications, the broad categories of actuarial work and the importance of climate-related risk to each category. The categories considered are actuarial modelling, product management, risk and capital management, investment management, and disclosure.   The paper concludes suggesting several next steps to consider moving forward.

 Glossary of Defined Terms Used in IAA Climate-Related Risk Publications

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  Pension Fund Environmental, Social and Governance (ESG) Risk Disclosures: Developing Global Practice - December 2020 - This paper summarizes the main features and trends in pension fund ESG risk disclosures around the world available to regulators, members and the public. Pension fund ESG risks are important in terms of long-term fund performance and delivering members’ benefits, as well as in relation to wider societal impacts, and this is a rapidly developing area. Based on the information gathered via a survey of 14 countries, the paper looks at how local legislation, type of pension fund, size, structure and available resources, among other factors, affect pension funds engaging in ESG disclosures.

The paper highlights important issues and trends relating to ESG disclosures that actuaries involved with pension funds, whether as trustees, investment managers, investment consultants or advisers on funding or governance, should  be aware of, so that they can ensure their clients or employers address the challenges on a timely basis. It is also relevant to the wider pension fund community.


Webinar on January 21, 2021

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  Risks to Water Resources - November 2020 - Since water resources are critical for human survival, even short-term disruptions in the supply of water can have potentially devastating consequences, including adverse impacts on financial security systems. The main purpose of this paper is to start a discussion on water resource risk among actuaries before addressing the broader scientific and public policy communities. We believe that actuaries need to be informed about how water resource risks affect a wide range of perils commonly insured, including life, health, property and agriculture. 

The paper illustrates the central risks by considering three representative systems in New York City, Mexico City and India. It goes on to illustrate best-practice actuarial risk management techniques, applied in a context outside the traditional actuarial domain. The paper employs what we believe to be best-practice actuarial risk management techniques, applied in a context outside the traditional actuarial domain. It may therefore serve as a useful educational tool, and a showcase for the profession’s risk management capabilities.


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  Climate Change, Insurance and Vulnerable Populations - October 2019 - The primary objective of this paper is to provide useful information concerning the extent to which private- and public-sector insurance can, using appropriate tools and models, address the needs of vulnerable populations regarding the adverse effects of climate change. The message provided by this paper is that private- and public-sector insurance programs can play a key role in addressing climate-related risks, though some of these programs have inherent limitations and cannot work effectively by themselves in all circumstances.

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  Flood Risk - June 2019 - This paper provides a description of flood risk and how it can be managed. It is intended to provide a fundamental background and encourage discussion on this important topic for use by actuaries, regulators, and public policy planners around the world. Aspects covered include: the entire flood risk management process, methods that can be used to assess, mitigate, and finance the risks involved, the role of insurance and governments, public policy implications, and the role of actuaries. Floods are a major threat to life, health and property across the world, making the methods of mitigating and financing them vitally important. A wide variety of approaches to manage this risk have been taken by both the private and public sectors, the best combination of which has to be determined by each country. It is the desire of the REWG that the principles considered in this paper can be effectively utilized by each country. 

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  Decarbonization: A Briefing for Actuaries - September 2018 - This paper provides an introduction to the topic of decarbonization for actuaries around the world. Aspects covered include: the main types and sources of greenhouse gas emissions; relevant international agreements; commitments made; the policies adopted; likely future developments; and, observations on potential actuarial implications. While decarbonization will increasingly affect every economy and will transform how and what goods are produced and services are provided, the timing and progress of change is highly uncertain.

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