Institute and Faculty of Actuaries to warn members on climate risk

The Institute and Faculty of Actuaries (IFoA), the international professional body for actuaries, will call on all its members “to think carefully about the consequences” of climate change in a ‘risk alert’ it plans to send out this month.

It is believed that the alert will focus on the issue of actuaries’ liability in relation to climate-based discussions they may, or may not, be having with their clients.

The plans were revealed by Nico Aspinall, Chair of the Institute’s Environment and Resource Board, at an ‘Ownership Day’ organised by the UKSIF, the UK Sustainable Investment and Finance Association, last week.

Aspinall, an independent defined contribution consultant, is a former Head of DC investment consulting for Willis Towers Watson who has co-authored a number of papers for the IFoA considering the impact of climate change, resource depletion, sustainability and the financial system on the actuarial profession.

The IFoA has sent out previous ‘risk alerts’ for other issues, and describes the process as seeking to offer “non-mandatory guidance”, to draw “members’ attention to specific issues” and encourage them to “think carefully about the consequences of actions they are taking”.This is the first climate related ‘risk alert’ – a relatively new innovation by the IFoA – to be sent to members.

RI also understands that the alert will be followed by a guide designed to help actuaries assess the potential risks that climate change poses to their profession.

The IFoA would not comment on when the guide would be published.

Climate-related risk is something that the IFoA is increasingly focusing on. In April it launched a tender calling for quantitative research on how climate change will affect pension funds. The tender states: “The research is intended to address the need for pensions actuaries to understand the potential magnitude of climate change impacts, and hence if and when climate change might be relevant to the funding advice they give”.

Speaking in relation to the work of the IFoA, Mike Clark, Founder of Ario Advisory and former Director of Responsible Investments at Russell Investments, said: “These publications will help actuaries, one set of actors in the financial system, develop and extend their professional advice around climate risk and related issues”.

Also at the Ownership Day event, UKSIF and HSBC Global Asset Management launched the latest version of the guide to Fiduciary Duty.