The science of climate change: Implications for risk management

There is now no doubt that climate change is happening and that it is happening due to human activity. According to Dr Maureen Agnew, Senior Research Associate at the Climatic Research Unit, School of Environmental Sciences, University of East Anglia climate change is now a serious issue for society as a whole and for the insurance industry in particular. Further increases in temperature are inevitable, and rises in sea level will continue for centuries. The increase in heavy rainfall events will have serious consequences for the environment and human activities. Here, Dr Agnew provides a brief overview of the science of climate change and underlines the importance for underwriters to recognise that climate risk has already increased, and incorporate climate into estimates of future risk as a dynamic component. She argues that risk management should consider a wide range of climate projections from multiple climate models, rather than relying on a single model output. She also urges the insurance industry to engage the wider economy in creating future scenarios