Podcast
Questions and Answers
What may lead to negative publicity for insurers regarding climate change?
What may lead to negative publicity for insurers regarding climate change?
- Engagement in insurance tech innovations
- Insurers investing in renewable energy projects
- Improvement in insurance affordability
- Insurers underwriting sectors perceived as contributing to climate change (correct)
Which factor can contribute to strategic challenges for insurers related to climate risk?
Which factor can contribute to strategic challenges for insurers related to climate risk?
- Stable weather patterns
- Social movements advocating for fossil fuel divestment
- Increased insurance premiums in a stable market
- Uncertainty about future climate scenarios (correct)
What is a potential consequence of not accounting for climate change in underwriting?
What is a potential consequence of not accounting for climate change in underwriting?
- Increased likelihood of profit margins
- Lower claim frequency
- Enhanced market stability for underwriting policies
- Underestimating the risk exposure (correct)
Which type of risk is most associated with weather-related insurance claims due to climate change?
Which type of risk is most associated with weather-related insurance claims due to climate change?
What is the primary purpose of developing scenario analysis and stress testing in relation to climate change?
What is the primary purpose of developing scenario analysis and stress testing in relation to climate change?
Which type of tools should be developed to monitor exposure to financial risks from climate change?
Which type of tools should be developed to monitor exposure to financial risks from climate change?
How might insurers' actions in response to climate risk affect their reputation?
How might insurers' actions in response to climate risk affect their reputation?
What does ICP 16 primarily focus on regarding insurers?
What does ICP 16 primarily focus on regarding insurers?
Which element is critical for an effective system of insurance supervision in relation to climate risks?
Which element is critical for an effective system of insurance supervision in relation to climate risks?
How should climate-related risks be integrated according to ICP 16?
How should climate-related risks be integrated according to ICP 16?
What is a potential risk associated with liability policies in the context of climate change?
What is a potential risk associated with liability policies in the context of climate change?
What could be a possible reaction from social movements regarding insurers and climate change?
What could be a possible reaction from social movements regarding insurers and climate change?
What is the role of stress testing in the Own Risk and Solvency Assessment (ORSA)?
What is the role of stress testing in the Own Risk and Solvency Assessment (ORSA)?
What should supervisors expect insurers to do concerning climate change risks in their portfolios?
What should supervisors expect insurers to do concerning climate change risks in their portfolios?
What are physical, transition, and liability risks associated with?
What are physical, transition, and liability risks associated with?
What entity establishes the standards for integrating climate risks in insurers' frameworks according to the content?
What entity establishes the standards for integrating climate risks in insurers' frameworks according to the content?
What does the assessment of physical risks include?
What does the assessment of physical risks include?
What types of risks are included in the reverse stress testing process for insurers?
What types of risks are included in the reverse stress testing process for insurers?
Why is it important for insurers to understand the models used for climate risk assessment?
Why is it important for insurers to understand the models used for climate risk assessment?
How might transition risks impact insurers?
How might transition risks impact insurers?
What documentation is required if an insurer assesses climate-related risks as immaterial?
What documentation is required if an insurer assesses climate-related risks as immaterial?
What might liability risks encompass for insurers?
What might liability risks encompass for insurers?
What is a potential outcome of assessing a climate-related risk scenario that causes insolvency?
What is a potential outcome of assessing a climate-related risk scenario that causes insolvency?
Which models are encouraged for insurers to use regarding climate-related stress testing?
Which models are encouraged for insurers to use regarding climate-related stress testing?
What is one focus of stress testing conducted by certain IAIGs in Canada over the past two years?
What is one focus of stress testing conducted by certain IAIGs in Canada over the past two years?
What aspects must insurers assess regarding climate change in the 2020 ORSA Supervisory Report according to the Financial Supervisory Commission in Chinese Taipei?
What aspects must insurers assess regarding climate change in the 2020 ORSA Supervisory Report according to the Financial Supervisory Commission in Chinese Taipei?
What will the pilot project involving the Bank of Canada and OSFI help assess?
What will the pilot project involving the Bank of Canada and OSFI help assess?
Which type of risk is NOT mentioned as a requirement for insurers to disclose in their ORSA Supervisory Report in Chinese Taipei?
Which type of risk is NOT mentioned as a requirement for insurers to disclose in their ORSA Supervisory Report in Chinese Taipei?
What major addition has the Financial Supervisory Commission incorporated into the stress test scenarios?
What major addition has the Financial Supervisory Commission incorporated into the stress test scenarios?
Which organization is involved in enhancing understanding of climate-related risks alongside the Bank of Canada?
Which organization is involved in enhancing understanding of climate-related risks alongside the Bank of Canada?
What is a key requirement for insurers in their ORSA Supervisory Report as indicated by the FSC in Chinese Taipei?
What is a key requirement for insurers in their ORSA Supervisory Report as indicated by the FSC in Chinese Taipei?
What does the 'first-order impact' of climate risk refer to in Canada's stress testing?
What does the 'first-order impact' of climate risk refer to in Canada's stress testing?
What is the primary mission of the International Association of Insurance Supervisors (IAIS)?
What is the primary mission of the International Association of Insurance Supervisors (IAIS)?
When was the International Association of Insurance Supervisors (IAIS) established?
When was the International Association of Insurance Supervisors (IAIS) established?
Which organization serves as the Secretariat for the Sustainable Insurance Forum (SIF)?
Which organization serves as the Secretariat for the Sustainable Insurance Forum (SIF)?
How many jurisdictions were members of the Sustainable Insurance Forum (SIF) as of May 2021?
How many jurisdictions were members of the Sustainable Insurance Forum (SIF) as of May 2021?
What is the main purpose of Application Papers?
What is the main purpose of Application Papers?
What role does the IAIS play in relation to the Financial Stability Board (FSB)?
What role does the IAIS play in relation to the Financial Stability Board (FSB)?
What is the long-term vision of the Sustainable Insurance Forum (SIF)?
What is the long-term vision of the Sustainable Insurance Forum (SIF)?
In which section is the concept of proportionality discussed?
In which section is the concept of proportionality discussed?
What type of papers does the IAIS produce to support specific supervisory material?
What type of papers does the IAIS produce to support specific supervisory material?
What should supervisors focus on according to the role of supervisors section?
What should supervisors focus on according to the role of supervisors section?
What is a key consideration in risk management regarding climate-related risks?
What is a key consideration in risk management regarding climate-related risks?
Which of the following is NOT a focus area for the Sustainable Insurance Forum (SIF)?
Which of the following is NOT a focus area for the Sustainable Insurance Forum (SIF)?
Which function is specifically noted for its role related to climate-related risks?
Which function is specifically noted for its role related to climate-related risks?
Which section addresses the monitoring of underwriting exposure to climate-related risks?
Which section addresses the monitoring of underwriting exposure to climate-related risks?
What is the focus of the section on Public Disclosure?
What is the focus of the section on Public Disclosure?
What does climate-related risk integration into outsourcing decisions aim to achieve?
What does climate-related risk integration into outsourcing decisions aim to achieve?
Which acronym stands for Enterprise Risk Management?
Which acronym stands for Enterprise Risk Management?
Which body is associated with international insurance supervisor activities?
Which body is associated with international insurance supervisor activities?
Which of the following is a recommended practice for senior management?
Which of the following is a recommended practice for senior management?
What is the role of the Board in corporate governance?
What is the role of the Board in corporate governance?
What does stress testing in the context of risk management help assess?
What does stress testing in the context of risk management help assess?
Which of the following represents a challenge in the interpretation of supervisory materials?
Which of the following represents a challenge in the interpretation of supervisory materials?
What is expected of financial institutions regarding sustainability risks in the near future?
What is expected of financial institutions regarding sustainability risks in the near future?
Which section focuses on the specific legislation for managing climate and environmental risks?
Which section focuses on the specific legislation for managing climate and environmental risks?
What do the sector-specific tabs provide in relation to climate and environmental risks?
What do the sector-specific tabs provide in relation to climate and environmental risks?
Which area is NOT covered by the focal points for integrated climate risk management?
Which area is NOT covered by the focal points for integrated climate risk management?
What type of institutions currently have good practices included in the guide?
What type of institutions currently have good practices included in the guide?
What is the objective of the tools in the guide regarding climate and environmental risk management?
What is the objective of the tools in the guide regarding climate and environmental risk management?
What key aspect of climate and environmental risk management is highlighted in the guide?
What key aspect of climate and environmental risk management is highlighted in the guide?
What does the guide periodically supplement with new insights and examples?
What does the guide periodically supplement with new insights and examples?
What is one of the key components of the Action Plan for Financing Sustainable Growth?
What is one of the key components of the Action Plan for Financing Sustainable Growth?
What does the Sustainable Finance Disclosure Regulation (SFDR) specifically address?
What does the Sustainable Finance Disclosure Regulation (SFDR) specifically address?
What must institutions analyze to determine the materiality of climate and environmental risks?
What must institutions analyze to determine the materiality of climate and environmental risks?
What approach is recommended for institutions when managing climate and environmental risks?
What approach is recommended for institutions when managing climate and environmental risks?
Which directive includes reporting requirements for large companies on ESG aspects?
Which directive includes reporting requirements for large companies on ESG aspects?
What is the intended role of the good practices outlined in the Guide by the European Commission?
What is the intended role of the good practices outlined in the Guide by the European Commission?
How should smaller institutions approach climate risk management according to the guidance?
How should smaller institutions approach climate risk management according to the guidance?
What is the function of the European Financial Reporting Advisory Group (EFRAG) in relation to the CSRD?
What is the function of the European Financial Reporting Advisory Group (EFRAG) in relation to the CSRD?
What needs to be regularly assessed to manage climate and environmental risks effectively?
What needs to be regularly assessed to manage climate and environmental risks effectively?
How can institutions encourage behaviors that align with their climate and environmental targets?
How can institutions encourage behaviors that align with their climate and environmental targets?
What is the initial step when conducting scenario analyses for climate-related risks?
What is the initial step when conducting scenario analyses for climate-related risks?
What is the purpose of including climate and environmental risks in an institution's risk appetite?
What is the purpose of including climate and environmental risks in an institution's risk appetite?
In scenario analyses, what type of scenario is NOT recommended for assessing long-term climate risks?
In scenario analyses, what type of scenario is NOT recommended for assessing long-term climate risks?
What analysis should be conducted to determine which environmental risks are material?
What analysis should be conducted to determine which environmental risks are material?
What is a significant benefit of using stress tests in assessing climate risks?
What is a significant benefit of using stress tests in assessing climate risks?
Which of the following is NOT a type of scenario that should be used when conducting scenario analyses?
Which of the following is NOT a type of scenario that should be used when conducting scenario analyses?
What type of risks should institutions examine in relation to climate and environmental factors?
What type of risks should institutions examine in relation to climate and environmental factors?
What does aligning remuneration policies with climate strategy aim to achieve?
What does aligning remuneration policies with climate strategy aim to achieve?
What is an essential characteristic of the assumptions made during scenario analyses?
What is an essential characteristic of the assumptions made during scenario analyses?
What is a key component of a risk management cycle in relation to climate risks?
What is a key component of a risk management cycle in relation to climate risks?
What is one of the major outputs of conducting business impact analyses in relation to climate risks?
What is one of the major outputs of conducting business impact analyses in relation to climate risks?
What two types of scenario analyses are identified for testing the resilience of a business model?
What two types of scenario analyses are identified for testing the resilience of a business model?
What should institutions consider when formulating their risk appetite regarding climate risks?
What should institutions consider when formulating their risk appetite regarding climate risks?
What role do scenario analyses provide for strategic planning?
What role do scenario analyses provide for strategic planning?
Which of the following is a characteristic of physical risk factors associated with climate change?
Which of the following is a characteristic of physical risk factors associated with climate change?
What can long delays in transitioning to a lower-carbon economy result in?
What can long delays in transitioning to a lower-carbon economy result in?
Which of the following does NOT represent an example of environmental degradation?
Which of the following does NOT represent an example of environmental degradation?
Systemic risks arise from which of the following situations?
Systemic risks arise from which of the following situations?
What type of risks include acute physical events like storms and floods?
What type of risks include acute physical events like storms and floods?
What can be considered a transition risk factor?
What can be considered a transition risk factor?
Which phenomenon can lead to both physical and transition risks for financial institutions?
Which phenomenon can lead to both physical and transition risks for financial institutions?
Why is it critical for insurers to manage climate risks effectively?
Why is it critical for insurers to manage climate risks effectively?
What is the primary effect of chronic physical risk factors on financial institutions?
What is the primary effect of chronic physical risk factors on financial institutions?
Which of the following is an example of transition risk factors?
Which of the following is an example of transition risk factors?
What type of risk can result from changes in climate and environmental policies?
What type of risk can result from changes in climate and environmental policies?
How might consumer behavior impact financial institutions in relation to climate risks?
How might consumer behavior impact financial institutions in relation to climate risks?
Which of the following describes a characteristic of financial transmission channels?
Which of the following describes a characteristic of financial transmission channels?
What financial risk can arise from disruption to production processes due to physical risks?
What financial risk can arise from disruption to production processes due to physical risks?
Which risk type poses challenges regarding liability claims due to climate change?
Which risk type poses challenges regarding liability claims due to climate change?
What occurs as a result of more volatile commodity prices due to climate risks?
What occurs as a result of more volatile commodity prices due to climate risks?
Which of the following risks is directly associated with the shift to renewable energy technologies?
Which of the following risks is directly associated with the shift to renewable energy technologies?
Which scenario illustrates the connection between climate risks and the financial system?
Which scenario illustrates the connection between climate risks and the financial system?
What type of risk involves the possibility of higher than expected insurance claims due to physical harm to insured assets?
What type of risk involves the possibility of higher than expected insurance claims due to physical harm to insured assets?
Which type of risk is primarily associated with impairment of asset values due to financial losses affecting a company's profitability?
Which type of risk is primarily associated with impairment of asset values due to financial losses affecting a company's profitability?
What risk is specifically related to the deteriorating creditworthiness of borrowers affected by changes in the economic environment?
What risk is specifically related to the deteriorating creditworthiness of borrowers affected by changes in the economic environment?
Which risk is characterized by disruptions in an insurer's activities related to damage to its own property?
Which risk is characterized by disruptions in an insurer's activities related to damage to its own property?
What risk arises from unexpected higher payouts due to economic deterioration affecting insurance operations?
What risk arises from unexpected higher payouts due to economic deterioration affecting insurance operations?
Which type of risk is linked to the negative impact of low-carbon transitions on financial asset values?
Which type of risk is linked to the negative impact of low-carbon transitions on financial asset values?
What specific market risk example is highlighted as a concern for insurers related to equity prices?
What specific market risk example is highlighted as a concern for insurers related to equity prices?
What risk is described as stemming from the potential impacts of climate change on borrowers and investment values?
What risk is described as stemming from the potential impacts of climate change on borrowers and investment values?
What consequence might arise from a bond price/yield shock?
What consequence might arise from a bond price/yield shock?
How can climate change impact underwriting risk?
How can climate change impact underwriting risk?
What type of risk is most associated with accountability for environmental damages?
What type of risk is most associated with accountability for environmental damages?
What element should be defined to initiate a climate change stress test exercise?
What element should be defined to initiate a climate change stress test exercise?
Which factor could potentially lead to an overall decrease in underwriting business?
Which factor could potentially lead to an overall decrease in underwriting business?
In the context of climate change, what is a critical aspect of insurers' liabilities?
In the context of climate change, what is a critical aspect of insurers' liabilities?
What common misconception could occur regarding the impact of climate change on credit risk?
What common misconception could occur regarding the impact of climate change on credit risk?
Which of the following describes a potential outcome of not addressing transition risk?
Which of the following describes a potential outcome of not addressing transition risk?
What type of risk is characterized by unanticipated shocks to physical assets within a short to medium term?
What type of risk is characterized by unanticipated shocks to physical assets within a short to medium term?
In which time frame are the anticipated shocks to financial and non-financial assets primarily experienced due to gradual warming?
In which time frame are the anticipated shocks to financial and non-financial assets primarily experienced due to gradual warming?
What aspect may require a higher granularity when evaluating climate risks for specific sectors?
What aspect may require a higher granularity when evaluating climate risks for specific sectors?
What is the potential long-term financial impact of unanticipated shocks due to transition risk?
What is the potential long-term financial impact of unanticipated shocks due to transition risk?
What distinguishes dynamic balance sheets from static balance sheets in the context of climate-related financial risk?
What distinguishes dynamic balance sheets from static balance sheets in the context of climate-related financial risk?
Which type of risk, described within the content, involves potential stranded assets due to sudden changes?
Which type of risk, described within the content, involves potential stranded assets due to sudden changes?
What is an important consideration when modeling climate-related perils on a regional level?
What is an important consideration when modeling climate-related perils on a regional level?
Which scenario corresponds to shocks anticipated to affect financial assets due to gradual warming?
Which scenario corresponds to shocks anticipated to affect financial assets due to gradual warming?
What is a primary advantage of using a fixed balance sheet approach?
What is a primary advantage of using a fixed balance sheet approach?
What is a major drawback of dynamic balance sheets in modeling?
What is a major drawback of dynamic balance sheets in modeling?
Which scenario approach allows for instantaneous shocks to the balance sheet?
Which scenario approach allows for instantaneous shocks to the balance sheet?
In the context of balance sheet modeling, what does reactive management imply?
In the context of balance sheet modeling, what does reactive management imply?
What is a consequence of using a fixed balance sheet approach for climate scenario modeling?
What is a consequence of using a fixed balance sheet approach for climate scenario modeling?
Why might the use of dynamic balance sheets complicate comparability?
Why might the use of dynamic balance sheets complicate comparability?
What does a fixed balance sheet primarily base its assessment on?
What does a fixed balance sheet primarily base its assessment on?
What type of management actions are specifically distinguished in relation to dynamic balance sheets?
What type of management actions are specifically distinguished in relation to dynamic balance sheets?
What does the Probable Maximum Loss (PML) indicate?
What does the Probable Maximum Loss (PML) indicate?
What does the concept of Annual Average Loss (AAL) represent?
What does the concept of Annual Average Loss (AAL) represent?
What does the term '1 in X years' indicate in the context of Return Period?
What does the term '1 in X years' indicate in the context of Return Period?
What is meant by Annual Exceedance Probability (AEP)?
What is meant by Annual Exceedance Probability (AEP)?
What type of loss does the concept of gross losses primarily refer to?
What type of loss does the concept of gross losses primarily refer to?
In the context of Assessing Annual Average Loss (AAL), the term 'Only physical' implies what?
In the context of Assessing Annual Average Loss (AAL), the term 'Only physical' implies what?
What does the Return Period illustrate in terms of extreme events?
What does the Return Period illustrate in terms of extreme events?
What does an increased Return Period signify about an extreme weather event?
What does an increased Return Period signify about an extreme weather event?
What is a significant outcome of a scenario with insufficient policy transition actions?
What is a significant outcome of a scenario with insufficient policy transition actions?
Which granularity level in scenario specifications promotes risk awareness at the counterparty level?
Which granularity level in scenario specifications promotes risk awareness at the counterparty level?
What is a disadvantage of using broad economic factors in climate scenario modeling?
What is a disadvantage of using broad economic factors in climate scenario modeling?
What is a challenge faced when specifying impacts at the activity level in scenario analysis?
What is a challenge faced when specifying impacts at the activity level in scenario analysis?
Which level of scenario granularity is least likely to provide consistency and comparability across firms?
Which level of scenario granularity is least likely to provide consistency and comparability across firms?
What does the aggregation level in scenario testing primarily enhance?
What does the aggregation level in scenario testing primarily enhance?
Which characteristic of sectoral granularity may lead to limitations in impact estimation?
Which characteristic of sectoral granularity may lead to limitations in impact estimation?
What is a common disadvantage when using firm-level granularity in climate scenario analysis?
What is a common disadvantage when using firm-level granularity in climate scenario analysis?
What does the specification of climate factors require from firms in scenario modeling?
What does the specification of climate factors require from firms in scenario modeling?
What is a key drawback of flexibility in modeling for scenario analysis?
What is a key drawback of flexibility in modeling for scenario analysis?
What does sectoral granularity enable regarding economic sectors?
What does sectoral granularity enable regarding economic sectors?
What could be a primary limitation of relying on broad economic factors for climate scenario modeling?
What could be a primary limitation of relying on broad economic factors for climate scenario modeling?
How does firm-level granularity affect risk management practices?
How does firm-level granularity affect risk management practices?
Which granularity level requires understanding and extensive mapping of a firm's specific activities for analysis?
Which granularity level requires understanding and extensive mapping of a firm's specific activities for analysis?
What does an Annual Average Loss (AAL) represent?
What does an Annual Average Loss (AAL) represent?
What does an event with a '1-in-100 year return period' imply?
What does an event with a '1-in-100 year return period' imply?
The term 'Annual Probability of Exceedance' (AEP) refers to what?
The term 'Annual Probability of Exceedance' (AEP) refers to what?
What is the focus of the Return Period of Gross Losses?
What is the focus of the Return Period of Gross Losses?
Which statement about transitional risks is accurate?
Which statement about transitional risks is accurate?
What is a key aspect of assessing 'Second-round effects'?
What is a key aspect of assessing 'Second-round effects'?
What is indicated by a higher AEP in climate risk assessments?
What is indicated by a higher AEP in climate risk assessments?
What is the primary calculation method that ignores reinsurance treaties when assessing financial impact?
What is the primary calculation method that ignores reinsurance treaties when assessing financial impact?
Which indicator is specifically associated only with transition risks?
Which indicator is specifically associated only with transition risks?
For the evaluation of physical risks, what aspect pertains to liability?
For the evaluation of physical risks, what aspect pertains to liability?
What must be addressed in the evaluation of transition risks?
What must be addressed in the evaluation of transition risks?
Which of the following metrics reflects the change in financial standing due to both physical and transition risks?
Which of the following metrics reflects the change in financial standing due to both physical and transition risks?
What type of risk is characterized by higher than expected mortality or morbidity rates?
What type of risk is characterized by higher than expected mortality or morbidity rates?
Which risk is primarily associated with disruptions affecting the value of financial assets due to climate change?
Which risk is primarily associated with disruptions affecting the value of financial assets due to climate change?
Which type of risk does NOT account for climate-related considerations in its evaluation?
Which type of risk does NOT account for climate-related considerations in its evaluation?
Which risk type includes the possibility of deteriorating creditworthiness of borrowers due to financial losses?
Which risk type includes the possibility of deteriorating creditworthiness of borrowers due to financial losses?
What is a specific example of market risk illustrated in the context provided?
What is a specific example of market risk illustrated in the context provided?
What type of risk encompasses the impairment of asset values caused by stranded assets during a transition period?
What type of risk encompasses the impairment of asset values caused by stranded assets during a transition period?
Which of the following risks is associated with unexpected higher payouts and broader economic deterioration?
Which of the following risks is associated with unexpected higher payouts and broader economic deterioration?
Which risk type involves damage to the insurer's own assets or property?
Which risk type involves damage to the insurer's own assets or property?
Which factor may lead to a deterioration in the creditworthiness of borrowers in the context of climate change?
Which factor may lead to a deterioration in the creditworthiness of borrowers in the context of climate change?
What could potentially trigger an increase in insurance prices related to underwriting risk?
What could potentially trigger an increase in insurance prices related to underwriting risk?
Which type of risk may become more prominent for insurers due to environmental damages?
Which type of risk may become more prominent for insurers due to environmental damages?
In a climate change stress test, what is considered a critical first step?
In a climate change stress test, what is considered a critical first step?
Which of the following factors is NOT associated with underwriting risk in the context of climate change?
Which of the following factors is NOT associated with underwriting risk in the context of climate change?
What aspect should insurers particularly consider when managing legal and reputational risks related to climate change?
What aspect should insurers particularly consider when managing legal and reputational risks related to climate change?
What is a potential outcome for insurers that do not adequately address transition risks?
What is a potential outcome for insurers that do not adequately address transition risks?
Which of the following best describes a key focus of stress testing in relation to climate risk?
Which of the following best describes a key focus of stress testing in relation to climate risk?
What is a significant factor that determines the extent of warming in climate change scenarios?
What is a significant factor that determines the extent of warming in climate change scenarios?
Which principle best describes the objective of integrating ESG risk assessments into the regulatory framework?
Which principle best describes the objective of integrating ESG risk assessments into the regulatory framework?
Which entity is responsible for the regulatory supervision framework related to insurers' climate risk?
Which entity is responsible for the regulatory supervision framework related to insurers' climate risk?
What does the term 'technical provisions' refer to in the context of climate risk assessment?
What does the term 'technical provisions' refer to in the context of climate risk assessment?
What is indicated as a necessary component during the Own Risk and Solvency Assessment (ORSA) related to climate risks?
What is indicated as a necessary component during the Own Risk and Solvency Assessment (ORSA) related to climate risks?
Which provides a measure of financial stability in the context of climate-related transition risks?
Which provides a measure of financial stability in the context of climate-related transition risks?
What type of risks does the assessment of climate-related financial risks primarily focus on?
What type of risks does the assessment of climate-related financial risks primarily focus on?
What is the role of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS)?
What is the role of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS)?
Which indicator is specifically associated with the assessment of overall losses in physical risk categories?
Which indicator is specifically associated with the assessment of overall losses in physical risk categories?
What type of indicators is primarily focused on showing the impact of climate change on average losses?
What type of indicators is primarily focused on showing the impact of climate change on average losses?
In assessing the impact on an insurer’s profit and loss, which type of risks does this consider?
In assessing the impact on an insurer’s profit and loss, which type of risks does this consider?
Which type of losses does the term 'tail losses' refer to in the context of technical indicators?
Which type of losses does the term 'tail losses' refer to in the context of technical indicators?
What is the basis for the calculation of losses termed 'total assets subject to'?
What is the basis for the calculation of losses termed 'total assets subject to'?
Which category of indicators specifically relates to ensuring technical results for non-life insurers?
Which category of indicators specifically relates to ensuring technical results for non-life insurers?
For life insurers, which of the following indicators can be split to analyze technical results?
For life insurers, which of the following indicators can be split to analyze technical results?
Which of these options could be excluded from calculating technical provisions in a specific scenario?
Which of these options could be excluded from calculating technical provisions in a specific scenario?
What are the primary focuses of climate change stress tests for individual (re)insurers?
What are the primary focuses of climate change stress tests for individual (re)insurers?
Which principle emphasizes the assessment of both transition and physical risks in climate change scenarios?
Which principle emphasizes the assessment of both transition and physical risks in climate change scenarios?
What is a macroprudential objective of climate change stress testing?
What is a macroprudential objective of climate change stress testing?
What aspect should be included when developing climate scenario narratives?
What aspect should be included when developing climate scenario narratives?
What does the assessment of climate-related financial impacts require?
What does the assessment of climate-related financial impacts require?
Which of the following best describes the role of scenario specifications in climate risk assessment?
Which of the following best describes the role of scenario specifications in climate risk assessment?
In climate change risk assessments, what is meant by 'potential protection gaps'?
In climate change risk assessments, what is meant by 'potential protection gaps'?
What is essential for enhancing risk management capabilities regarding climate change?
What is essential for enhancing risk management capabilities regarding climate change?
What key challenge does scenario design face in the context of climate change?
What key challenge does scenario design face in the context of climate change?
Which factor is critical in assessing the resilience of (re)insurers in climate change scenarios?
Which factor is critical in assessing the resilience of (re)insurers in climate change scenarios?
Flashcards
IAIS Mission
IAIS Mission
Promote effective and globally consistent insurance supervision to create fair, safe, and stable markets for policyholders and contribute to global financial stability.
IAIS Role
IAIS Role
International standard-setting body for insurance sector supervision, developing principles, standards, and assisting in their implementation.
SIF's Goal
SIF's Goal
Integrate sustainability factors into insurance company regulation & supervision.
SIF Collaboration
SIF Collaboration
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IAIS Membership
IAIS Membership
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SIF Membership
SIF Membership
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Application Papers in Supervision
Application Papers in Supervision
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International insurance supervision
International insurance supervision
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Application Papers
Application Papers
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Proportionality Principle
Proportionality Principle
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Role of the Supervisor
Role of the Supervisor
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Preconditions and Resources
Preconditions and Resources
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Supervisory Review and Reporting
Supervisory Review and Reporting
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Information Gathering and Sharing
Information Gathering and Sharing
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Supervisory Feedback and Follow-up
Supervisory Feedback and Follow-up
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Corporate Governance
Corporate Governance
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Appropriate Allocation of Oversight
Appropriate Allocation of Oversight
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Business Objectives and Strategies
Business Objectives and Strategies
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The Role of the Board
The Role of the Board
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Duties of Senior Management
Duties of Senior Management
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Duties related to Remuneration
Duties related to Remuneration
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Risk Management and Internal Controls
Risk Management and Internal Controls
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Integrating Climate-related Risks
Integrating Climate-related Risks
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Reputational Risk (Climate Change)
Reputational Risk (Climate Change)
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Reputational Risk (Insurance Coverage)
Reputational Risk (Insurance Coverage)
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Strategic Risk (Climate Change)
Strategic Risk (Climate Change)
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Underwriting Risk (Climate Change)
Underwriting Risk (Climate Change)
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Liability Policies and Underwriting Risk
Liability Policies and Underwriting Risk
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Preconditions for Effective Insurance Supervision
Preconditions for Effective Insurance Supervision
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Supervisory Practices and Climate Risks
Supervisory Practices and Climate Risks
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ICP Assessment Methodology
ICP Assessment Methodology
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Climate Risk Assessment for Insurers
Climate Risk Assessment for Insurers
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Stress Testing and Scenario Analysis
Stress Testing and Scenario Analysis
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Financial Risk Monitoring Tools
Financial Risk Monitoring Tools
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Climate Risk Integration into ERM Framework
Climate Risk Integration into ERM Framework
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Underwriting Policy and Climate Change
Underwriting Policy and Climate Change
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Integrating Climate Risk into Own Risk & Solvency Assessment (ORSA)
Integrating Climate Risk into Own Risk & Solvency Assessment (ORSA)
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Supervisory Expectations for Climate Risk Management in Insurance
Supervisory Expectations for Climate Risk Management in Insurance
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Examples of Supervisory Practices in ORSA and Stress Testing
Examples of Supervisory Practices in ORSA and Stress Testing
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Reverse Stress Testing
Reverse Stress Testing
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Climate-related Risk Assessment
Climate-related Risk Assessment
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Physical Risk Assessment
Physical Risk Assessment
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Transition Risk Assessment
Transition Risk Assessment
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Liability Risk Assessment
Liability Risk Assessment
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Climate-Related Stress Testing Scenarios
Climate-Related Stress Testing Scenarios
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Internal vs. External Models
Internal vs. External Models
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Climate Risk Materiality
Climate Risk Materiality
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ORSA and Climate Risk
ORSA and Climate Risk
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First-Order Climate Impacts
First-Order Climate Impacts
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Second-Order Climate Impacts
Second-Order Climate Impacts
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Climate Risk Scenarios in Stress Testing
Climate Risk Scenarios in Stress Testing
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Transition Risk
Transition Risk
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Liability Risk (Climate)
Liability Risk (Climate)
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Climate Change in Stress Testing (Taiwan)
Climate Change in Stress Testing (Taiwan)
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ORSA Supervisory Report (Taiwan)
ORSA Supervisory Report (Taiwan)
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Climate and Environmental Risks
Climate and Environmental Risks
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Integrated Climate and Environmental Risk Management
Integrated Climate and Environmental Risk Management
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Focal Points for Risk Management
Focal Points for Risk Management
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Good Practices for Sector-Specific Risk Management
Good Practices for Sector-Specific Risk Management
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Supervisory Expectations for Managing Climate and Environmental Risks
Supervisory Expectations for Managing Climate and Environmental Risks
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Key Aspects of Operational Management
Key Aspects of Operational Management
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Legislative and Regulatory Framework
Legislative and Regulatory Framework
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Alignment with ECB Supervisory Expectations
Alignment with ECB Supervisory Expectations
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Physical Risk Factors
Physical Risk Factors
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Transition Risk Factors
Transition Risk Factors
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Systemic Risk
Systemic Risk
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Interrelation of Physical and Transition Risks
Interrelation of Physical and Transition Risks
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Examples of Physical Risks
Examples of Physical Risks
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Examples of Transition Risks
Examples of Transition Risks
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Impact of Climate Risks on Financial Institutions
Impact of Climate Risks on Financial Institutions
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EU Taxonomy
EU Taxonomy
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SFDR
SFDR
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CSRD
CSRD
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Materiality of Climate Risks
Materiality of Climate Risks
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Proportionate Approach
Proportionate Approach
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Risk-Based Approach
Risk-Based Approach
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Supervisory Dialogue
Supervisory Dialogue
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Good Practices
Good Practices
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Physical Risks
Physical Risks
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Transmission Channels
Transmission Channels
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Market Risk
Market Risk
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Credit Risk
Credit Risk
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Liquidity Risk
Liquidity Risk
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Operational Risk
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Underwriting Risk
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Scenario Analysis
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Stress Test
Stress Test
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Integrated Risk Management
Integrated Risk Management
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Interrelation of Risks
Interrelation of Risks
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Risk Appetite and Climate Risks
Risk Appetite and Climate Risks
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Materiality Analysis for Climate Risks
Materiality Analysis for Climate Risks
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Integrating Climate Risks into Risk Management
Integrating Climate Risks into Risk Management
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Aligning Remuneration with Climate Targets
Aligning Remuneration with Climate Targets
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Physical Climate Risks
Physical Climate Risks
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Transition Climate Risks
Transition Climate Risks
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Systemic Climate Risk
Systemic Climate Risk
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Physical Risk (Climate)
Physical Risk (Climate)
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Market Risk (Climate)
Market Risk (Climate)
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Credit Risk (Climate)
Credit Risk (Climate)
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Scenario Analysis (Climate)
Scenario Analysis (Climate)
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Stress Test (Climate)
Stress Test (Climate)
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What is transition risk?
What is transition risk?
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What is physical climate risk?
What is physical climate risk?
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What is systemic climate risk?
What is systemic climate risk?
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What is the relationship between physical and transition risks?
What is the relationship between physical and transition risks?
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Why are financial institutions concerned about climate risks?
Why are financial institutions concerned about climate risks?
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What are some good practices for managing climate risks?
What are some good practices for managing climate risks?
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What is the importance of materiality when it comes to climate risks?
What is the importance of materiality when it comes to climate risks?
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What is a risk-based approach to managing climate risks?
What is a risk-based approach to managing climate risks?
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Integrated risk management (Climate)
Integrated risk management (Climate)
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Risk Appetite
Risk Appetite
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Materiality Analysis
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PML
PML
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AEP
AEP
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AAL
AAL
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What is a Return Period?
What is a Return Period?
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What is an example of transition risk?
What is an example of transition risk?
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What is an example of a physical risk?
What is an example of a physical risk?
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What is the difference between transition and physical risks?
What is the difference between transition and physical risks?
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Fixed/Dynamic Balance Sheet
Fixed/Dynamic Balance Sheet
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Embedded vs. Reactive Management Actions
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Fixed Balance Sheet Approach
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Dynamic Balance Sheet Approach
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Climate Change Component in Insurance Stress Testing
Climate Change Component in Insurance Stress Testing
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Physical Risks in Insurance
Physical Risks in Insurance
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Transition Risks in Insurance
Transition Risks in Insurance
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Liability Risks in Insurance
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Stress Testing for Climate Change
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Scenario Analysis for Climate Change
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Integrating Climate Risks into Insurance Operations
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Supervisory Expectations for Climate Risks
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Underwriting Risk (Climate)
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Reinsurance Treaties
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Impact Calculation (Reinsurance)
Impact Calculation (Reinsurance)
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Physical Risk (Climate Change)
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Balance Sheet Indicators
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Climate Change Stress Test
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Objective of Climate Change Stress Test
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Scenario Design
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Derive Climate and Financial Variables
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Evaluate Financial Impact
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Assess Resilience and Potential Responses
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Profitability Indicators
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Technical Indicators
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Relative Change
Relative Change
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Gross/Ceded/Net Aggregated Losses
Gross/Ceded/Net Aggregated Losses
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Exposures (Sum Assured)
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Total Assets Subject to Transition Risks
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Expected Losses (AAL)
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Tail Losses
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Study Notes
International Association of Insurance Supervisors (IAIS)
- The IAIS is a voluntary membership organization of insurance supervisors and regulators.
- Its mission is to promote effective and globally consistent insurance supervision.
- The IAIS aims for fair, safe, and stable insurance markets, benefiting policyholders and contributing to global financial stability.
- It was established in 1994.
- The IAIS coordinates with other international financial policymakers and associations.
- It shapes financial systems globally.
- It is a member of the FSB and the IASB.
- It partners with the Access to Insurance Initiative (A2ii).
- It regularly provides input on insurance matters and global financial sector regulation to G20 leaders and other international standard-setting bodies.
Sustainable Insurance Forum (SIF)
- The SIF is a leadership group of insurance supervisors and regulators working on sustainability issues.
- Its goal is to strengthen understanding and responses to sustainability issues in the insurance sector.
- The SIF aims to establish a global insurance system that integrates sustainability factors into regulation and supervision.
- The UNDP serves as its Secretariat.
- The SIF works closely with the IAIS.
- It has 31 member jurisdictions as of May 2021.
Application Papers
- Application Papers support specific supervisory material.
- They are guidelines on applying principles and standards in different situations.
- They offer examples of good practice for supervisors.
- They do not create new requirements.
- The proportionality principle applies to Application Papers' content.
Contents and Structure of the Application Paper
- The paper provides an introduction and context, along with background information and work related to the SIF and IAIS.
- It covers proportionality, terminology (definitions of terms related to climate change, etc.), the supervisor's role, and corporate governance.
- It discusses risk management, internal controls, and the integration of climate-related risks into risk management systems.
- It details the role and responsibilities of senior management.
- It focuses on consideration of climate-related risks by different functions, such as the actuarial function, compliance function, and internal audit function.
- The paper also covers investments, public disclosures, and Enterprise Risk Management for Solvency Purposes, including underwriting policy and the monitoring of climate-related risks within the underwriting assessment.
- It includes stress testing and scenario analysis related to climate-related risks.
Climate Change Impacts on Insurance
- Climate change is recognized as a major global threat.
- It impacts human, societal, environmental, and economic systems.
- Climate change and the response to it (GHG emissions reduction, adaptation) affect the global economy and financial system.
- Climate change is a source of financial risk for insurers.
- Climate change impacts insurability of policyholder property and assets, as well as insurance operations and investments.
- Climate change creates opportunities for insurers to contribute to climate risk management and resilience.
- Climate risk-based pricing from insurers provides economic signals regarding the changing risk environment.
- Insurance can play a critical role in climate risk management through assessment, management, and carriage of risk as well as investment.
Prudential Risks Related to Climate Change
- Potential impacts from climate change include investment risks, liquidity risks, and operational risks.
- Climate change can impact the value of investment portfolios and expose the insurance sector to both physical and transition risks.
- A lack of reliable and comparable climate-related information may create uncertainty and market dynamics.
- Climate change impacts may affect insurer assets, including property, equipment, IT systems, and personnel, increasing cost and affecting claim management.
Role/Responsibility/Supervisory Considerations
- Supervisors should identify, monitor, assess and contribute to climate risk mitigation.
- Supervisors must assess the extent of climate-related risks to related economies and financial systems.
- Supervisors should establish mechanisms for effective responses and mitigation strategies.
- Supervisors are expected to include climate-related risks in the own risk and solvency assessment (ORSA) process and stress testing.
Other Key Notes
- Implementation of the recommendations from the 2018 and 2020 Issues Papers are discussed.
- Proportionality in supervisory processes should be observed.
- The document provides examples of supervisory practice in ORSA and stress testing in different jurisdictions (Canada, Chinese Taipei, and the Netherlands), highlighting best practices, models, and considerations taken by supervisory bodies
- The supervisor's role includes ensuring adequate resources, frameworks, and appropriate risk management strategies to address climate-related risks.
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Description
Explore the role of the International Association of Insurance Supervisors (IAIS) and the Sustainable Insurance Forum (SIF) in promoting effective insurance supervision. This quiz delves into their missions, goals, and collaborations in the realm of global financial stability and sustainability. Test your knowledge on these pivotal organizations established to shape the future of insurance markets.
