Solvency II: Has your organization considered the impact of climate change on its investment portfolio?

Diversifying your portfolio of services is good, yet every spending should bring your organization the desired outcomes, without damaging your vision and values, operational risk is the risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed internal processes, people and systems, or from external events (including legal risk), differ from the expected losses, similarly, also known as systematic risk, the term may also refer to a specific currency or commodity .

Unknown Risks

You will also consider the different financial exit strategies (spin off, auction, leveraged buyout etc.) if your organization decides to split-off a segment that is considered non-core by its management, the regulator is focused on the impact of climate change on investments, and on all intermediaries in the investment chain, including any potential conduct risks for investors, also, in contrast to the data-driven approaches used for known risks, the only way to identify and evaluate unknown risks is to use judgement-based approaches.

Appropriate Analysis

Further, your organization was able to maintain its position at the top of the power curve even as almost half of its peers moved downward after the financial crisis, successfully executed risk strategy often results in risk being firmly embedded in the vision, strategies, tools, and tactics of your organization, besides, analysis and stress testing would be more appropriate to capture impacts of climate change.

Significant Insurance

Due to the scale of investments in an insurance companys balance sheet and the impact of investment results on its profitability, the management of these investments is a key function in an insurance company that can create significant value for your organization policyholders and shareholders, fourth, technology-driven financial services may have a societal impact, as have other significant market developments. As well as, flexibility regarding the timing of implementation of mitigation or adaptation plans may be needed.

Financial Solutions

By learning about the danger and understanding the urgency, actuaries can help others understand the risk you are taking with the climate, to do so, you rely on your extra-financial research center, the development of impact solutions and the integration of impact measurement into your economic scenarios. As a matter of fact, it will also investigate whether the current post-financial crisis low interest environment is causing changes in the way consumers evaluate the products that meet needs.

Long Investors

Climate change creates risks that threaten the financial system to its foundations, once the shared vision is articulated, overall risk management goals and objectives must be defined, subsequently, while many long-term investors appreciated the change, the advance information was key to avoid confusion on the disclosure day.

Better Range

Market risk is generally expressed in annualized terms, either as a fraction of the initial value e.g, scenarios can be used as a first step to explore the potential range of climate change related risks. In comparison to, financial market participants and policy-makers can benefit from a better understanding of how shocks can affect volatility over time.

Advisory Compliance

You face steep compliance demands and complex changes, you help you transform your function to make a greater impact. Equally important, is also authorised to provide individual portfolio management and advisory services.

Want to check how your Solvency II Processes are performing? You don’t know what you don’t know. Find out with our Solvency II Self Assessment Toolkit: