Turning Climate Change Science into Impact

By Joss Matthewman, Senior Director, Climate Change Product Management & Strategy, RMS, IUMI Professional Partner,

Marine cargo insurers are acutely aware of the impact of severe weather events on goods stored at port and warehouse locations across the globe, and the drumbeat of evidence around climate change causes new uncertainty around the potential of increased physical risk. With the Intergovernmental Panel on Climate Change (IPCC) recently setting out their thoughts in a working draft of the Sixth Assessment Report (AR6) the linkages between rising global temperatures from carbon dioxide emissions leading to more severe climate events, are firming up.

I recently had the opportunity to present to IUMI members for a webinar entitled “Understanding the Risk from Climate Change to Cargo Insurers.” Members want to quantify the impact climate change might have on the sector – both on assets and liabilities – with pressure coming directly from regulators, banks, shareholders and a range of other stakeholders, opening a new wave of reporting and analysis. Insurers also want to get ahead of the curve and understand and integrate climate change risk analysis into their business, similar to their approach for any other risk.

Many insurers hit a barrier; climate science shows different scenarios with rising temperatures, and whether certain perils are influenced by this, but not how this translates to more extreme weather – or what the real-world impacts could be. RMS recognised this, and has examined each peril separately, from coastal flood to severe convective storm, to establish a level of confidence. Combining current catastrophe risk models with future climate scenarios, we break this barrier and translate climate science into more quantifiable, mainstream risk analysis – with three RMS Climate Change Models and more to come. RMS is now working with clients to quantify the main climate change risks into region/peril analysis with outputs such as loss cost metrics for flood, extreme wind events, or hail, for port locations and cargo routes around the globe.

Please watch the webinar if you didn’t catch it first time, and I hope it helps to explain how marine cargo insurers can move forward with confidence in quantifying the potential risks from climate change.