Mike Carney, Governor of the Bank of England Chairman of the Financial Stability Board, gave its speech at Lloyd’s of London, 29 September 2015.
“There are three broad channels through which climate change can affect financial stability:
While the attribution of increases in claims to specific factors is complex, the direct costs of climate change are already affecting insurers’ underwriting strategies and accounts. For example, work done here at Lloyd’s of London estimated that the 20cm rise in sea-level at the tip of Manhattan since the 1950s, when all other factors are held constant, increased insured losses from Superstorm Sandy by 30% in New York alone.
The speed at which such re-pricing occurs is uncertain and could be decisive for financial stability. There have already been a few high profile examples of jump-to-distress pricing because of shifts in environmental policy or performance.
Risks to financial stability will be minimised if the transition begins early and follows a predictable path, thereby helping the market anticipate the transition to a 2 degree world.”
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