Climate risk initiative of the year: Conning

The climate risk initiative of the year award was created this year to recognise work in what is perhaps the most important topic of the times and one in which insurers have been increasingly pressed to tackle.

Conning's Climate Risk Analyzer has helped insurers to track the impact of climate scenarios on their asset portfolio covering a gamut of assets, from corporate bonds to real estate, in over 20 currency regions.

The focus on the asset side of the insurance balance sheet is relatively underdeveloped relative to underwriting business, but is increasingly necessary with frameworks such as the own risk and solvency assessment and the Task Force on Climate-related Financial Disclosures calling for more focus on the impact of climate on insurers' portfolios.

Conning's software combines stochastic projections from its GEMS economic scenario generator with the latest thinking on climate change effects within financial markets.

Among the tool's features has been the development of a new stochastic market-risk-modelling overlay technique to incorporate climate scenario analysis into existing insurance risk models.

Meanwhile, its analytic component quantifies the physical and transition risk in an asset allocation relative to a benchmark

Conning has also created a financial damage function enabling users to investigate the effect of different timings of climate impacts on risk metrics at different horizons.

The latter is a key innovation and allows the user to track different paths that a given climate scenario could take and the impact these will have on the risk metrics of a portfolio.

Conning also won  climate risk management solution of the year  in the InsuranceERM UK & Europe 2021 awards.

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Solving the ESG conundrum

Solving the ESG conundrum

Conning's Matthew Daly, head of corporate and municipal teams, and Matt Lightwood, director of risk solutions, talk about what insurers should be doing in addressing this key area