Climate Change Special Interest Group
Purpose of the group
The main purposes of the group will be to:
• Research and collate climate change risk management best practices and solutions.
• Develop a strong committee with a wider representation of members across different industry sectors.
• Support IRM’s goals including increasing membership and developing educational training for members.
• Hold monthly meetings with the core committee members and organise 3-4 events a year.
Relevance to the risk community
There is an expectation from key stakeholders including regulators that existing risk management frameworks will need to address risks from climate change (CC), and thus the scope of the SIG will be to support how organisations enhance their frameworks and risk maturity from identifying to reporting CC risks.
The relevance of this risk is highlighted in many recent risk publications including The Global Risks Report 2019 from the World Economic Forum. In their survey environmental risks linked to CC counted for 3 of the top 5 global risks, 'extreme weather events', 'failure of climate-change mitigation and adaptation' and 'biodiversity loss and ecosystem collapse'.
Aims and Objectives
Inspire: Provide active thought leadership.
Learn: Evaluate tools and techniques for members.
Engage: Create a series of CC SIG meetings with IRM members and RM Community.
Research: Commission quarterly surveys on emerging climate change risk trends.
Collaborate: Develop key relationships.
The role of the Risk Manager in assessing climate risks
The newly formed IRM Climate Change Special Interest Group recently held its inaugural meeting, kindly hosted by the Nationwide Building Society at 1 Threadneedle Street, London.
It was standing room only as the event was fully subscribed with over 100 attendees signing up within days of the event going live on the IRM website, reflecting the importance of climate change in risk management and the insurance industry going forward.
The new SIG was introduced by IRM’s Deputy Chairman Clive Thompson, CFIRM and the aims and objectives of the group were explained by the Climate Change SIG Chairman Martin Massey, MIRM:
Martin explained that the most important activities of the SIG will to produce thought leadership and organise another 3-4 events during 2020. As well as writing articles the SIG plan to develop a practitioners to help for risk managers and boards to focus on how to integrate climate change with an organisations existing Enterprise Risk Management (ERM) frameworks. The SIG also plans to arrange quarterly surveys to build engagement and will welcome active involvement from SIG members and other stakeholders
Presentations followed, under theme of the evening: “The role of the Risk Manager in assessing climate risks”. The presenters were Martin Massey, Giorgis Hadzilacos from the PRA and Stefan Startzel from AON each delivering their views of three separate key stakeholder groups – trainers, regulators and providers.
Martin provided an overview of the main impacts and evidence of climate change as well as explaining the new universally adopted risk taxonomy that has developed and explaining physical, transition and legal risks emanating from climate change. He also outlined two of the most important risk management tools, namely horizon scanning and stress and scenario testing which can assist risk managers in identifying and assessing short, medium and long-term impacts by integrating alternative future scenario assumptions of for example global CO2 emissions and policy changes such as carbon taxes.
Giorgis provided a very insightful presentation on the expectations of the financial regulator providing an overview of the PRA’s supervisory statement. He covered the four main areas in which organisation need to develop a plan namely governance, risk management, scenario analysis and disclosure. He explained that the knowledge that collectively exists of assessing financial impacts from climate change is quickly developing. He also explained that identifying non-competitive spaces is crucial for the knowledge to evolve and assist firms in practice.in respect to disclosure Giorgis raised some important observations including the fact that there are organisations that are clear “front-runners” but also concerns in respect to “laggards” that are adopting the wait and see approach.
After the presentations there was a panel discussion chaired by Clive Thompson and the speakers were joined by Susan Young from Randal and Quiller, Dr Sarah Gordon and Oliver Breen, Senior Strategy Manager for Climate Change, Nationwide Building Society Manager and fellow Climate Change SIG Committee member.
The panel discussion covered a range of pertinent questions which opened up to the floor. The main question revolved around how risk managers are currently addressing climate changes and what should be their priorities. The panel also covered how non-financial companies are addressing issues and challenges as well as covering what opportunities are there for organisations. There was a lengthy discussion around how to report and monitor climate change to management and boards.
Some of the pertinent quotes from the event are set out below:
"When it comes to climate risk assessment, time is of essence. It is better to get it approximately right now rather than perfectly right later.
As an industry it is not the first time we have dealt with a complex problem – asbestos, Cyber, GDPR are some examples from the recent past. Take a complex problem and break it down and communicate it to your stakeholders– it can gain traction and become more manageable".
"Be curious about climate change, read all the guidance… Be proactive and challenge the business. Stay informed and ahead of the curve.”
Dr Sarah Gordon, IRMCert
"Climate change is an incredibly emotive and complex subject. The challenge for Risk managers is to be aware of this complexity and be prepared to engage with and communicate the unintended consequences posed by the full sustainable development picture.
We need to consider how we communicate and tackle risks arising from climate change. Insurers and investors are impacted by our changing climate (for example through extreme weather events), and also have the opportunity to influence those companies who are on the front line for managing emissions (for example through responsible investing in natural resources).”
Martin Massey, MIRM
“We don’t talk much about the upside of climate change but the major benefits of managing sustainability include improved brand image, employee engagement, innovation, new sources of revenue, effective risk management and enhanced stakeholder relations.”
Oliver Breen (response to a question from the floor)
"Risk management is about enabling informed decision making. This is what we need to have in the back of our minds [with climate change]– it is incumbent on the risk manager to translate the complex and uncertain and deliver the information the board needs in a summarised way so they can make those informed decisions".
Original write up article can be found here
|Date:||Monday 17th Feb 2020|
|Time:||16:00 - 18:00|