Guy Carpenter ties up with wider Marsh McLennan to tackle risks resulting from climate change

Reinsurance broker  Guy Carpenter is collaborating with the wider  Marsh McLennan businesses, alongside Marsh, Oliver Wyman, and Mercer, to launch a suite of advisory and modeling services designed to address multiple facets of physical, transition and liability risks resulting from climate change.

Guy Carpenter has established an integrated range of services targeted at companies looking to develop and integrate robust climate change strategies into their Environmental, Social and Governance programmes.

Some of the key services include physical risk modeling - natural hazard risk assessment and risk modeling, exposure data enhancement, adjustment of catastrophe models; risk governance and regulation - capital modeling and solvency capital requirement calculations, regulatory compliance processes; risk transfer - traditional risk transfer, parametric instruments and catastrophe bonds; new institutional arrangements - advice on public risk transfer solutions and public/private partnerships, and insurance solutions – risk underwriting for new technologies and infrastructure.

The broker noted that climate change is increasingly influencing the frequency and severity of natural catastrophe perils with physical climate risk creating both acute and chronic threats. In tandem, the shift to a less-polluting lower-carbon economy is spawning multiple transition risks, while failure to manage these physical and transition exposures is generating the potential for liability risks.

It said the new services will enable companies to navigate these multitude of challenges in a highly dynamic environment, by helping them understand which perils and regions are most at risk due to climate change.

By using catastrophe modeling tools suitable for different future time horizons and warming assumptions, geographic accumulations of risk and/or underwriting, it can enable companies to quantify the impacts under potential climate scenarios on the overall volatility and tail risk of their insured portfolio. By applying a combination of modeling techniques, proprietary risk assessments and the latest in scientific research, clients will be able to prioritise their climate-related activities, while also benchmarking the success of their approach against industry peers.

Peter Hearn, CEO of Guy Carpenter, explained: “The myriad challenges resulting from climate change have initiated action, with early adopters seeking to demonstrate best-in-class responses to these issues. To reach that level, clients must gain clarity around critical areas such as their physical exposure to climate risk, how they manage transition risk, how they address potential liability risk, and how they underwrite towards greener outcomes. By offering this wide spectrum of climate-focused services and collaborating with the wider Marsh McLennan businesses, we can help our clients achieve that clarity.”

Dean Klisura, president of Guy Carpenter, added: “Managing climate risk is becoming an increasingly prominent component of an organisation’s overarching Environmental, Social and Governance approach, with the majority of our clients expressing a strong desire to develop robust strategies on this front. As the direct impacts of a shifting climate reverberate through our industry, Guy Carpenter is working to provide our clients with the foundations necessary to build resilience, ensuring that they are in turn able to deliver for their clients during this transformative period for our planet.”

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