The Joint Forum on Actuarial Regulation (JFAR) has published a report on understanding the science of climate change.
The report, a collaboration between regulatory agencies with an interest in actuarial work (FRC, IFoA, FCA, TPR, PRA), emphasises the seriousness of climate change and the crucial part actuaries play in reducing its risks.
The report is intended to fill in any knowledge gaps actuaries may have regarding the science underlying climate change, enabling actuaries to contribute more.
Analysis of global temperature changes, the effects of large-scale human migration, the impact of increasing sea levels, particularly on the UK and Europe, and the implications for food security and mortality are all included as is the connection between climate change and biodiversity.
Financial Reporting Council (FRC) executive director of regulatory standards Mark Babington says: “Actuaries have a significant role to play in addressing and mitigating the risks of climate change. This report, which is an important cross-regulatory collaboration, is designed to provide actuaries and other professionals in the financial services sector with a toolkit to understand the science behind climate change. Actuaries should take action to familiarise themselves with this resource and appropriately apply it to their work.”
The Pension Regulator executive director of regulatory policy, analysis and risk David Fairs says: “From worsening storms to increased risk of fire and flood, this report on the science of climate change makes for shocking but essential reading. All pension schemes, regardless of size, are highly likely exposed to climate-related risks and opportunities. Trustees already have access to our guidance in this area but will also need the support of skilled, competent and knowledgeable advisers. We welcome work to help improve actuaries’ understanding of climate-related risks and opportunities, so they are better equipped to help trustees manage, and ultimately protect, savers’ retirements.”
Institute and Faculty of Actuaries (IFoA) regulation board chair Neil Buckley says: “The IFoA has a broad range of guidance and resources to support members in considering climate-related risk as part of their work and as an organisation, we have committed to being net-zero by 2030. As a member of JFAR, we believe this report represents another valuable resource to help actuaries better understand and communicate the ecological, social and economic impact of climate change, and the world-changing, systemic risks it presents.”