FRC considers climate change requirements for actuaries
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The Financial Reporting Council is proposing to introduce a new requirement to ensure actuaries include climate change and ESG-related risks in the course of their work.
Among the changes, it proposes to introduce a new ‘Application’ section with regulatory expectations to help practitioners in complying with the TAS principles by providing more specific requirements relating to those principles.
The FRC also plans to introduce guidance over time to provide further clarity on good practice relating to geographic scope, technical actuarial work and proportionality. The consultation runs until 7 September.
Climate change a “less well-considered” risk
According to the FRC, informal feedback suggested that there are concerns on whether climate change risks are adequately considered when actuaries are performing technical actuarial work and whether these are the only non-traditional risks which the profession should be concerned about.
Mark Babington, the FRC’s executive director of 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. The proposed amendments to TAS 100 are designed to ensure actuarial work remains fit for purpose within the rapidly changing environment in which actuaries operate," he added.
The FRC is the UK’s independent regulator responsible for issuing and maintaining technical actuarial standards. The first TAS 100: Principles for Technical Actuarial became effective in July 2017.
The Institute and Faculty of Actuaries constantly raises awareness around the financial risks posed by climate change and asks actuaries to consider how the implications of climate change affects their work, actions and decision making.
In April, the IFoA issued its latest risk alert to say that actuaries may not be appropriately considering, or communicating clearly, the impact of climate change and sustainability related issues in their actuarial work.
Do you think actuaries are doing a good job considering climate change in their work?