The 12th annual survey of emerging risks conducted by the Canadian Institute of Actuaries, Casualty Actuarial Society, and Society of Actuaries has ranked climate change as the top risk for 2019.
The industry survey, which included 267 actuaries, ranked climate change as the top risk for 2019, beating off concerns over cyber damages, financial instability, and terrorism.
Respondents rate climate change as the top risk
According to the survey findings, of the 267 actuaries surveyed, 22% identified climate change as the top emerging risk. It was also the top-ranked choice for combination risk and tied with cyber/interconnectedness of infrastructure for top current risk.
The top five risks for 2019 were identified as climate change, cyber-crimes and interconnectedness of infrastructure, financial volatility, asset price collapse and technology. It is a dramatic shift from previous years, when climate change lagged well behind other dangers to people and property. In last year’s survey, only 7% of respondents rated climate change as the top emerging risk.
Actuaries can manage climate risks better
The survey results align with several current and future projections of impact of climate change on the global economy. According to one estimate, natural disasters caused about $340bn in damages across the world in 2017, with insurers paying out a record $138bn.
Climate change can make a sizable dent in global economic growth by disrupting supply chains and demand for products, and creating harsh working conditions, among other issues.
Actuaries can help manage climate risks and they can also help nudge societies away from poor planning – such as overbuilding in high-risk coastal flood zones – and towards better choices – like building more resilient infrastructure designed to withstand anticipated sea level rise.
Help build a more sustainable Earth more quickly
Actuary and climate data scientist Steve Kolk said, “The survey shows actuaries are engaged and tackling this risk frontier and it thrills me to see actuaries join the effort and help us all build a sustainable planet more quickly.”
Wake Forest University associate professor of statistics Robert Erhardt said, “Actuaries, on the whole, are recognising not only the magnitude of rising climate-related risks but, more importantly, that they can play a positive role in helping society actively manage those risks.”
While the report does signal a potential change in risk awareness, it may also have come down to the timing of the survey - the Intergovernmental Panel on Climate Change report was released in October 2018, a few weeks before the survey.
Taking note of climate change
Society of Actuaries fellow Max Rudolph, who also prepared the report, has said, “The effects of climate change became a common front-page story in the past year – and risk managers are taking notice.”
A set of 23 risks were presented to the participants. These were grouped into five categories: Economic, environmental, geopolitical, societal, and technological.
The anonymous online survey was primarily based in North America with additional responses from Europe, Asia, South America, Africa, Caribbean/Bermuda and the Middle East. A