Results from a new study by AXA show that 60% of risk managers fear that certain geographies or activities will become uninsurable in future due to the impact of climate change.
AXA says that its 2021 AMRAE Climate Commitment Barometer shows the growing importance of taking into account and understanding climate risks.
It shows that the majority of risk managers are aware of the threats posed by climate change to their companies and their value chains.
For instance, more than 80% fear the impact of floods or temperature increases, while more than half of the respondents consider they have poor visibility on the climate risks affecting their value chain.
But despite this, AXA found that companies’ level of integration of climate risk is uneven, as more than 40% of risk managers surveyed report that their organization does not yet have a climate risk governance mechanism in place.
Although nearly 75% of the risk managers interviewed stated that they are committed or very committed to climate risk issues, AXA notes that they play a variable role in managing these risks.
In 60% of cases, the CSR team is responsible for managing climate risks, while the risk team is responsible in 30% of cases only, and in 12% of the cases, management is shared between the two teams. Only 20% of the risk managers surveyed were found to be directly responsible for analyzing and mapping climate risks, while 46% contribute to this process.
Additionally, AXA’s study shows that 70% of risk managers are not satisfied with the insurance market’s response to growing climate risks, and would like insurers to better react by modeling climate perils in a more precise and transparent manner, and by better considering adaptation measures in place in their risk calculations.
But more than 60% of respondents feel that they need additional skills to grow in this field and 40% wish to receive more training on how to take climate risks into account.
“It is not too early to say that the year 2021 will be a landmark year for Risk Managers in many French companies,” AXA stated. “The severe and tragic climatic events of this summer (floods in Belgium and Germany, forest fires in Greece, hurricane Ida in the United States, etc.) are already having an impact – or will have an impact – on renewals, highlighting the need to adapt the risk and insurance businesses to the growing climate risks.”
“These events undeniably accentuate what we have known for many years, but which we had not necessarily all integrated: climate change and its consequences are already here. We must not only adapt to its inevitable effects, but also limit our impact to reduce the emissions that lead to accelerated climate change,” AXA continued.
“The year 2021 was also the year of the COP26, an event expected to raise climate ambitions on a global scale. Its mixed results call on private sector players to play their part more than ever.”