FRC Wants Actuaries to Pay More Attention to Climate and ESG Concerns

Published on: 18 June 2022 05:41 PM
by KnowESG
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The Financial Reporting Council (FRC) is collecting feedback on proposed changes to its rulebook that will require actuaries to consider climate change and ESG risks in their work.

The amendments are part of a revision to Technical Actuarial Standard 100 100: General Actuarial Standards.

Mark Babington, the FRC’s lead on regulatory standards, said: “Actuaries have a key role to play in considering risks and modelling future events so that users of actuarial information can make informed decisions about material risks.

“As the importance of climate change risks continues to grow, it is critical that actuaries consider these risks in the course of their work.”

He went on to say that the proposed changes will assist in ensuring that actuarial work remains relevant in a fast-changing world.

The FRC highlighted in the consultation that while actuaries frequently assess established risk categories, they tend to place less focus on unique and emerging risks.

The proposals' new requirement requires actuaries to examine any substantial risks as they perform their duties, including climate change and ESG risks, that they may reasonably be expected to have known about when working on a matter.

Actuaries must also disclose whatever dangers they have identified.

According to a recent Institute and Faculty of Actuaries (IFoA) study, there is a dearth of focus on climate-related risks in many areas of actuarial practice.

The consultation on new actuarial responsibilities comes at a time when actuaries are likely to become more involved in climate change and pandemic modelling due to the growing relevance of data science.

The FRC also stated in the consultation document that it intends to provide modelling guidelines in the future. The FRC will accept opinions from interested parties until September 7, 2022.

Source: IPE

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