scholarly journals Climate risk reporting practices by UK insurance companies and pension schemes

2019 ◽  
Vol 24 ◽  
Author(s):  
P. Klumpes ◽  
M. Acharyya ◽  
G. Kakar ◽  
E. Sturgess
Keyword(s):  
Climate Change ◽  
Risk Management ◽  
Annual Reports ◽  
Insurance Companies ◽  
Climate Risk ◽  
Pension Scheme ◽  
Financial Risks ◽  
Reporting Practices ◽  
Pension Schemes ◽  
Risk Reporting

Abstract Increasing global concern over the impact of climate change has recently led to public scrutiny over the adequacy of existing risk management practices by insurance companies and pension schemes in dealing with these challenges that potentially impact both individual actuaries and the Institute and Faculty of Actuaries generally. Most recently, the Prudential Regulation Authority has issued further guidance concerning its expectations for the UK insurance industry regarding the development of an approach to disclosure on and management of the financial risks from climate change, while a Parliamentary Committee has demanded public clarification from UK pension scheme trustees regarding their degree of engagement with incorporating climate-related financial risks into their investment decision-making. The aim of this paper is to identify the dominating factors of the current evolvement of UK insurance companies’ and pension schemes’ climate risk disclosure practices. This paper analyses both the nature and extent of changes in the risk reporting practices of these entities that have evolved in order to meet these demands for increased accountability. We first analyse relevant sections of latest annual reports produced by a sample of 15 UK insurance companies and 15 pension schemes. We find only limited alignment of insurance firm and pension scheme annual reports with the 11 specific Task Force on Climate-Related Financial Disclosure’s (TCFD) recommended disclosures. We also examine what key financial risk and/or other organisational characteristics are most closely associated with the degree of alignment with TCFD specified disclosures related to governance, strategy, risk management and performance metrics. We find that incentives facing sample insurance companies to align their climate-related disclosures with TCFD recommendations are related to their management of reputation risk (measured on the basis of size and type of business). Whereas the incentives facing pension schemes are related to the desire to reduce information asymmetry (measured by liability risk) among their stakeholders concerning this issue. Further, consistent with a stakeholder theory explanation, it appears that only a minority of large, publicly listed insurance companies and large local government pension schemes are taking action to report on their actions to mitigate climate risk. We also discuss examples of best practice climate risk reporting. The implications for the actuarial profession in engaging with climate risk are discussed in line with the findings of the study.

scholarly journals Climate risk reporting practices by UK insurance firms and pension schemes - Abstract of the London Discussion

2020 ◽  
Vol 25 ◽  
Keyword(s):  
Insurance Companies ◽  
Climate Risk ◽  
Publication Type ◽  
Reporting Practices ◽  
Pension Schemes ◽  
Insurance Firms ◽  
Risk Reporting

Abstract This abstract relates to the following paper: Klumpes, P., Acharyya, M., Kakar, G. & Sturgess, E. (2019) Climate risk reporting practices by UK insurance companies and pension schemes. British Actuarial Journal, 24, e30. doi:10.1017/S1357321719000229.

Making the climate change issue “real” for managers

2016 ◽  
Vol 7 (1) ◽  
pp. 84-97
Author(s):  
Rodley Pineda
Keyword(s):  
Climate Change ◽  
Risk Management ◽  
Supply Chain ◽  
Business Leaders ◽  
Annual Reports ◽  
Supply Chain Risk Management ◽  
Supply Chain Risk ◽  
Content Type ◽  
Climate Change Issue ◽  
Management Approaches

Purpose Although businesses face various types of risks because of climate change, the level of concern among managers seem to lag behind the institutional pressure to deal with the climate change issue. This paper aims to bridge this gap in perceptions by presenting a framework to assist business leaders in translating the climate change issue into a format that managers can appreciate. Design/methodology/approach Drawing from the supply chain literature, this paper presents a model that shows how climate change-related policy and resource risks affect a firm’s supply, operations and demand domains and the risk management approaches appropriate for each type of risk. Excerpts from 10-K annual reports filed by US automotive and food retailers are used to show how the model works. Findings Although majority of companies examined do not report climate change-related risks, the evidence from those that do affirm the framework’s ability to translate these risks into manager-friendly supply chain terminology. Originality/value Managers can participate in sustainability actions by focusing on the risks and effects of climate change. Business leaders, researchers and policymakers can adopt supply chain risk management terminology to connect with otherwise indifferent managers.

Dynamic accountability and the role of risk reporting during a global pandemic

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chiara Crovini ◽  
Stefan Schaper ◽  
Lorenzo Simoni
Keyword(s):  
Risk Management ◽  
Information Needs ◽  
Risk Recognition ◽  
Content Type ◽  
Reporting Practices ◽  
Global Pandemic ◽  
Conceptual Paper ◽  
The Impact ◽  
Risk Reporting

PurposeThis article lays out some conceptual considerations of how dynamic accountability and risk reporting practices could be tailored during and after a global pandemic.Design/methodology/approachThis conceptual paper seeks to foster the debate on the crucial role of risk reporting considering the impact and uncertainty caused by the coronavirus disease 2019 (COVID-19) pandemic and stakeholder information needs in this context. The authors draw upon neo-Durkheimian institutional and legitimacy theories and elements of the accounting and risk management literature to discuss the challenges that the pandemic poses to risk recognition and assessment and the subsequent disclosure decision of risk information.FindingsRisk reporting has its roots in risk recognition and assessment. To live up to their accountability in these times of uncertainty, organisations need to address their stakeholders' new and changing information needs. Ad hoc disclosures and linking risk management and reporting to their business models (BM) would improve the risk recognition and assessment practices and the meaningfulness of the disclosed information. Hence, we provide some examples and discuss potential avenues to address these challenges and adapt risk reporting accordingly.Originality/valueThis conceptual paper contributes to the risk reporting and accountability research fields. Previous studies on communication during a crisis have focused on sustainability reporting. Thus, this study contributes to that literature by considering the role of risk reporting in times of an unexpected large-scale global crisis, such as the COVID-19 pandemic, and by highlighting possibilities for moving risk reporting towards becoming more accountability based.

The application of climate adaptation algorithm to physical climate risk assessment and management of the TCFD

2020 ◽  
Author(s):  
Iwen Liu ◽  
Ching-pin Tung
Keyword(s):  
Climate Change ◽  
Risk Assessment ◽  
Risk Management ◽  
Value At Risk ◽  
Financial Stability ◽  
Climate Adaptation ◽  
Task Force ◽  
Financial Disclosure ◽  
Climate Risk ◽  
Climate Scenarios

<p>The Financial Stability Board (FSB) published “Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)” in 2017 to assist companies in assessing climate-related risks and opportunities and financial disclosure. However, the integration between climate scenarios and the corporate risk management system and the financial quantification of climate-related risks are still the challenges for corporate practice. To collect the climate scenarios mentioned in TCFD and integrate the relevant factors in corporate operations, the study will use the framework of TCFD: Governance, Strategy, Risk management, Metrics and Targets, introduce the first three steps of the Climate Change Adaptation (CCA Steps): "identifying problems and establishing objectives", "assessing and analyzing current risk", "assessing and analyzing future risk", and use climate risk template which use  Hazard, Exposure and Vulnerability as risk assessment factors to establish a framework for the evaluation and analysis of risk. After establishing a complete method for climate risk and opportunity assessment, in response to the "financial disclosure", the study will link to the financial statement items, referring to related concepts such as “Value at Risk” and “stranded assets”, to strengthen the integrity and transparency of corporate financial disclosure. At last, the study will select a specific climate physical risk in a industry for case study by the analysis of literature, international reports and historical events and introduce a climate risk assessment framework to verify the practicality of this framework. The study's results will be applied to the risk management of business operations. At the same time, the framework of climate risk can assist companies to put climate change factors into their decisions, maintaining the sustainable competitiveness in a low-carbon economy.</p><p>Key words: climate risk assessment, TCFD, enterprise risk management</p>

scholarly journals Integrated risk management for defined benefit pension schemes: a practical guide

2017 ◽  
Vol 23 ◽  
Author(s):  
A. N. Hitchcox ◽  
C. Patel ◽  
C. J. Ramsey ◽  
E. L. Studd ◽  
L. T. Ma ◽  
...  
Keyword(s):  
Decision Making ◽  
Risk Management ◽  
Continuous Process ◽  
Working Party ◽  
Investment Strategy ◽  
Pension Scheme ◽  
Defined Benefit ◽  
Pension Schemes ◽  
Integrated Risk ◽  
Integrated Risk Management

AbstractThe Working Party has developed some practical hints and tips for those developing integrated risk management (IRM) plans for UK defined benefit pension schemes in the context of the requirements of the Pensions Regulator. Four case studies are presented to illustrate its conclusions, which are encapsulated in the ten commandments for effective IRM. IRM is the consideration of investment, funding and covenant issues, and how these interact. Its purpose should be to aid decision making and so should have a clear outcome in mind. It should be a continuous process and should form part of everyday trustee governance – it is not simply a one-off exercise. Whilst most Trustees and advisors consider funding issues when setting their investment strategy and vice versa, fewer fully integrate covenant into their decision-making process. However, covenant underpins all risk taken in a pension scheme and so needs to form a regular part of trustee discussions and analysis by advisors.

scholarly journals Insurance Management in Terms of Globalization Processes in Ukraine

2021 ◽  
Vol 7 (522) ◽  
pp. 207-212
Author(s):  
S. A. Vlasyuk ◽  
Keyword(s):  
Risk Management ◽  
System Analysis ◽  
Management Plan ◽  
Insurance Market ◽  
Insurance Companies ◽  
Effective Control ◽  
Financial Risks ◽  
Potential Risks ◽  
Business Entities

Insurance represents the most efficient risk management instrument that can protect both individuals and business entities from financial risks arising from various unforeseen situations. In turn, expanding the horizons of the insurance market requires clarity and coherence in the activities of insurance companies, and therefore studying the factors that directly affect the management of insurance organizations appears relevant. It is found that one of the forms of risk control is insurance management, which includes the detection, assessment and intervention of risks, that is, a defense strategy for preparing for the unexpected events, as it is regulated by normative legal acts, and the implementation of principles and doctrines that are generally accepted. It is identified that the main methods of insurance management, such as avoidance, preservation, distribution, transfer, prevention and reduction of losses, can be applied to all areas of activity of both individuals and business entities, and can pay off in the long term. The development of the insurance market in Ukraine in the future is possible due to the introduction of an effective mechanism of insurance management based on system analysis and effective control at macro and micro levels. By implementing a risk management plan and considering various potential risks or events before they occur, economic entities can save their own money and protect their future by timely setting of certain contours in order to avoid potential threats, minimize their impact in case of their occurrence, and cope with the results.

The effect of award on CSR disclosures in annual reports of Malaysian PLCs

2015 ◽  
Vol 11 (4) ◽  
pp. 831-852 ◽  
Author(s):  
Abdirahman Anas ◽  
Hafiz Majdi Abdul Rashid ◽  
Hairul Azlan Annuar
Keyword(s):  
Climate Change ◽  
Annual Reports ◽  
Content Type ◽  
Reporting Practices ◽  
Csr Reporting ◽  
The Moment ◽  
Csr Disclosure ◽  
Corporate Social ◽  
Practical Implications

Purpose – The paper aims to examine the determinants of corporate social responsibility (CSR) disclosures in the annual reports of Malaysian public listed companies (PLCs). In 2006, Bursa Malaysia Berhad (BMB) launched its CSR Framework (effective in 2007) which is supposed to guide the Malaysian PLCs’ CSR disclosures. It is believed that this CSR framework may influence CSR disclosures to be more systematic, yet there is no evidence whether this framework influences the extent and quality of CSR disclosures. Thus, this study examines this area of research. The study also tests the influence of award on CSR disclosures. Design/methodology/approach – CSR disclosure checklist was developed to analyse the extent and quality of CSR information disclosures in the year 2008 annual reports of the Malaysian PLCs. Findings – Malaysian PLCs disclose more CSR information related to community and environment than workplace and marketplace CSR themes. On the other hand, the quality of disclosure practices was minimal when it is compared to the extent of disclosure practices. Finally, the study also found that the award’s variable has a significant positive relationship with both the extent and quality of CSR disclosure practices of the Malaysian PLCs. Research limitations/implications – The recently developed BMB’s CSR framework seems to have impact on the level and systematic CSR reporting practices of Malaysian PLCs. However, the quality of CSR disclosures is considered minimal. Practical implications – The results of the study bring some practical implications to the regulators, particularly Bursa Malaysia. First, it is good to observe that most companies have practiced specific disclosure in a separate statement with regard to CSR. However, the format of presentation and the extent of disclosure vary among the firms. Second, further guidelines need to be developed to provide a clearer framework of disclosure for CSR information. At the moment, Bursa Malaysia only listed down general principles of CSR themes. In addition, the regulators should also look into the evolving issues in CSR, such as the issue of climate change reporting. For example, the Climate Disclosure Standards Board has issued a voluntary Climate Change Reporting Framework. Originality/value – This study examined both the traditional (i.e. firm size and profitability) and non-traditional (i.e. award) factors influencing management’s decision to disclose CSR information in the annual reports of the Malaysian PLCs. Furthermore, the study reported how Malaysian PLCs comply with the recently implemented CSR framework issued by BMB.

Financial Management of the UK Pension Protection Fund

2013 ◽  
Vol 18 (2) ◽  
pp. 345-393 ◽  
Author(s):  
J-P. Charmaille ◽  
M.G. Clarke ◽  
J. Harding ◽  
C. Hildebrand ◽  
I.W. Mckinlay ◽  
...  
Keyword(s):  
Risk Management ◽  
Financial Management ◽  
Enterprise Risk Management ◽  
Pension Scheme ◽  
Defined Benefit ◽  
Corporate Sponsor ◽  
Stakeholder Groups ◽  
Pension Schemes ◽  
Enterprise Risk ◽  
The Uk

AbstractThe UK Pension Protection Fund (PPF) was established in April 2005 to protect the pensions of members of UK private sector defined benefit pension schemes which have insufficient assets and whose corporate sponsor fails. The Fund takes over the pension scheme assets and assumes responsibility for the payment of compensation to the former members of the scheme. The PPF is funded by a levy on the population of eligible schemes. This paper discusses the application of Enterprise Risk Management principles and techniques to the unique situation of the PPF. The elements of the financial management of the Fund have been developed by reference to practice within proprietary insurance institutions and within pension funds. The paper will be of interest and, we hope, of some value to students, researchers and analysts and also to the PPF's own stakeholder groups that have a stake in an effective pension protection regime.

scholarly journals THEORETICAL ORDERING OF THE METHODS AND TOOLS OF FINANCIAL RISK MANAGEMENT OF INSURANCE COMPANIES

2017 ◽  
pp. 139-149 ◽  
Author(s):  
Nataliia Prykazyuk ◽  
Lesya Bilokin'
Keyword(s):  
Risk Management ◽  
Financial Risk ◽  
Stress Testing ◽  
Insurance Companies ◽  
Financial Risks ◽  
Insurance Company ◽  
Risk Avoidance ◽  
Financial Risk Management ◽  
Risk Transfer ◽  
And Control

Essence of methods and tools of financial risk management of insurance companies are defined. It has been founf out that the methods of financial risk management of the insurer can be called a system of techniques in the field of financial risk management. Its use allows to solve a number of tasks to a certain extent. For example, it can allow to foresee the occurrence of risk events in the process activities of insurance companies and identify different ways of their avoidance, minimization, and transfer, and to take measures to reduce the consequences of occurrence of such events to the insurer. It has been defined that the tools of financial risk management of the insurance company are the totality of means. With their help we can make the analysis, control and funding of possible financial risks of the insurer that can arise in the process of implementation of economic activity. The methods and tools of financial risk management are closely connected. The main methods of financial risk management of the insurance company are analyzed. The most common methods of risk management in insurance are risk assessment, risk avoidance, risk reduction, risk acceptance, risk transfer. The instruments of financial risk management of the insurer, in particular, stress testing, early warning tests, Monte-Carlo, VaR-methodology, methods, which are based on calculation of indicators of ES, EVA and RAROC, as well as hedging, diversification, valuation, self-insurance, co-insurance and reinsurance are defined. The necessity to use the methods and tools of financial risk management by insurance companies is defined. It has ben provrd that the insurance company should choose the most appropriate methods and tools for risk management. The company should also take into account all the peculiarities of its activities and will assist in the evaluation and control of existing and prevention of possible risks.

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