Some of Asia Pacific's brightest minds in climate change risk management met today to discuss how the financial services industry can effectively identify, assess and manage climate-related risks.
In CoreLogic's virtual event ‘Moving ahead on climate change: Tackling climate risks in financial services', the panel of influential experts from Australia and New Zealand shed light on:
- key challenges and issues for the finance sector,
- how systemic risk from climate change could affect industry sustainability,
- how different sectors within the financial services are tackling climate risk,
- challenges with the use of climate models by business for the purpose of assessing climate physical risk and how these challenges can be managed,
- translating climate information into useable data and insights, and more.
Milena Malev, CoreLogic GM of Financial Services & Insurance Solutions, says "Climate hazards present systemic risks to the economy, strategy and governance. The increase in severity and frequency of natural disasters is no longer temporary, it's close to permanent.
"There was consensus across our panel that cross-sectoral collaboration will be key to effective management of the impact of climate change. Responsibility is shared. The flow of information between different collaborative parties, between research and scientific communities, industry including banking, insurance and investment, government and regulators, and even consumers, is what's important,” says Ms Malev.
When discussing physical risks, the panel acknowledged that there were few actions businesses can start doing now to understand their risk exposure, including looking at the possible impact of climate change on real assets and portfolios down to the property level or at a less granular level, at postcode level.
"The panel acknowledged while there's still some work to be done in transition risk and modelling compound events, tools, software systems and data is already available and being most effectively utilised by the insurance and reinsurance sector. Now is the time for bankers and investors to follow suit. Many different outcomes can be achieved with the data; not just assessing a loan, but also to help comply with regulations, conduct portfolio stress-testing and follow it through time and ultimately, connect with customers to ensure their awareness of the risk exposure of their property or physical asset.
"For example, Munich Re's knowledge of natural hazards combined with CoreLogic's rich property data and attributes is bringing the evaluation of property risks to life, enabling the industry to start evaluating the impact of climate change on their physical assets and portfolios in a very real, accurate and practical manor,” says Ms Malev.
On the regulatory environment, the panel agreed both Australia and New Zealand are very much on top of trying to cooperate and address climate change.
Ms. Malev says "This is very encouraging and positive. It's accepted by the industry that more needs to be done to integrate the discussion between government, regulators, industry and consumer; becoming more client-centric, understanding the problem but also sharing the knowledge if it exists.
"The community education piece is another important consideration in how we move ahead on climate change. The role should be shared between banks, insurers and customers. Transparency between these three parties will provide stability for everybody,” says Ms. Malev.
CoreLogic's Climate Risk panel featured the below experts:
- Dr. Tanya Fiedler, The University of Sydney & Sydney Environment Institute (Moderator),
- Dr. Pierre Wiart, Head of Consulting & Risk Management Solutions, CoreLogic Australasia,
- Ernst Rauch, Chief Climate & Geo Scientist, Munich Re,
- Jacki Johnson, Co-Chair, Australian Sustainable Finance Initiative,
- Tim Grafton, Chief Executive Officer, Insurance Council of New Zealand, and
- Zoe Whitton, Executive Director, Pollination
To see a recording of the event, please click here.
To find out more about CoreLogic's Climate Risk solution, visit www.corelogic.co.nz/products/climate-risk-solution.