Climate Change Risk highlighted in CBI Insurance Newsletter September 2022
September 2022On 20th September 2022, the Central Bank of Ireland (“CBI”) published its regular Insurance Newsletter for September 2022.
While the Newsletter is directed at (re)insurers, the CBI’s observations in relation to climate change risk (following a thematic review of a sample of (re)insurer’s Own Risk and Solvency Assessments (“ORSAs”)), the Central Bank has helpfully included a collated list of all CBI publications on Climate Risk to date.
The relevant article also sets out guidance on how any regulated entity can implement climate change risk considerations into business strategies.
The CBI’s three main observations were:
- Take a holistic approach to climate change risk to better understand risks to the business, secondary impacts, materiality and areas of further focus;
- Consider impacts of climate change to the business model beyond the short term; and
- Link climate change risk assessments to strategy, in order to manage or mitigate risks rather than simply monitoring them.
In the ORSAs reviewed, the CBI observed some examples where climate change risk had been integrated into a (re)insurer’s business planning and strategic thinking and identified examples of good practices observed including:
- Embedding the consideration of climate change risk into risk management processes, e.g. updating risk management policies based on conclusions of assessments carried out;
- Developing a sustainability strategy to define the (re)insurer’s objectives in respect of climate change; and
- Identifying potential opportunities that arise and ways to develop business models in the future as a result of climate change. The CBI expects (re)insurers to integrate findings and conclusions from risk and scenario analysis into their future strategy to ensure a sustainable business model, e.g. by updating their risk appetite, setting key performance indicators in respect of climate change risk, etc.
To read the Newsletter in full, please go to the following link:
Insurance Newsletter - September 2022 (centralbank.ie)