Captives can be key to managing climate risk

Risk management is evolving to address climate change and sustainability challenges, with captives playing a key role, according to a FERMA Forum 2024 panel entitled ‘Climate Risk, a journey from Risk Management to Captive Solutions.’ 

The panel featured Marine Charbonnier (head of captives, AXA XL), Fabio Petruzzelli (head of nat cat & geospatial solutions, AXA XL), and Vicky Roberts-Mills (head of energy transition, AXA XL). 

According to the panel, clients are increasingly incorporating ESG (Environmental, Social, Governance) factors into their risk analysis and seeking dedicated solutions like captives. Captives enable companies to integrate sustainable practices into their risk management strategies, providing protection while addressing ESG challenges. By offering coverage for excess layers, particularly in natural catastrophe exposures, captives offer a flexible and strategic option for risk management.

Climate change is now one of the top global risks for companies, affecting everything from supply chains to physical assets. Transitioning away from fossil fuels has become a necessity, with decarbonisation no longer a mere option. Risks are increasingly interconnected, requiring a holistic approach that combines modelling capabilities and data-driven insights. The panel underlined that AXA XL is well-positioned to help clients manage these complex risks, offering parametric solutions that meet client demand for additional capacity. 

Collaboration is crucial in addressing climate-related challenges. One example shared involved AXA XL helping a client manage flood risks by creating a water retention basin upstream of a treatment plant, which also enhanced wetlands and reduced downstream flood risks. This complex solution involved multiple stakeholders, showcasing the importance of teamwork in risk management.

Risk engineers play a vital role in developing strategies for both prevention and mitigation. Addressing new risks, such as those linked to natural hazards or water management, requires innovative thinking and the correct application of new technologies. AXA XL's wide range of solutions, combined with a strong focus on collaboration, continues to support clients in navigating these emerging challenges. 

FERMA Forum Today is in partnership with Captive Review, part of Newton Media.

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