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Survey of Risks Managers: Climate Change is one of their main concerns

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#Risk Management
The organization Ceres is a well-known American coalition of investors and environmentalists working alongside companies to address sustainability challenges. The organization has posted a new survey called, “Climate Change Risk Perception and Management: A Survey of Risk Managers”, conducted with PRMIA and Zurich Financial Services. The report attempted to determine whether risks managers were concerned about climate change and how insurances companies are dealing with this risk.

Risks managers are concerned about climate risks!

A third of respondents consider that climate change regulation is a top concern risk. Most managers feel that their firms are likely or somewhat likely to be affected by any of the 5 categories of climate risks …and within the next 10 years:

• Competitive risk (e.g. changes in demand for products /services in response to climate regulation): 62.6 % of managers

• Physical risk (e.g. reduced water supplies): 61.9 %

• Legal risk (e.g. fines or penalties) : 57.5 %

• Regulatory risk (e.g. Greenhouse gas emission regulation) : 56.9 %

• Reputational risk (e.g. negative publicity) : 47.2 %

Risks managers believe that their companies should anticipate these risks. In reality, a third of the managers believe that, if government took regulatory action to reduce greenhouse gas emission, that their, “company would pay more attention to climate risk”. However, a quarter of the respondents report that no one in the company was assigned the responsibility of putting in place a process to manage climate change risk.

Risk managers do not believe their existing insurance coverage is adequate to manage climate liability risks!

When asked if their insurance coverage was adequate to recover from climate change risks, about a third of respondents could not answer because they were unsure…and only 10% of all respondents said that, “their current coverage was adequate for all liability risks surveyed”. The rest of the surveyors seemed to need an extension for climate change claims, especially for “Carbon Credit/Offset Coverage” and “Specialized Liability Coverage” (for new investments or activities that could present performance failures). These results are particularly attention-grabbing for the insurance industry which is deeply concerned about costs increases directly linked to regulation changes.

As a conclusion, even if managers are, “aware of and concerned about at least some aspect of climate risk”, management strategies related to this risk are unbalanced, and “products and services are not clear”. The report concludes that, “Insurance products and risk consultation services may not be adequate, and more communication between insurers, risk advisors and risk managers are needed to understand where extensions may be necessary.”

{{LNK|Download the full report on|}}

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