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More than three-quarters of risk managers say they are concerned about regulatory risk arising from climate change, according to a survey released Monday during the Risk & Insurance Management Society Inc.'s Annual Conference & Exhibition in Boston.
In a survey of more than 200 risk managers across a variety of industries, nearly 79% of respondents indicated that they believe their organizations will have to address regulatory risks imminently or in the near term, within two to 10 years. Nearly 9% said they believe they will face regulatory risk in more than 10 years, while almost 13% believe they won't face the risk at any time.
The survey was conducted by Boston-based Ceres, a coalition of investors, environmental groups and other organizations that works with businesses to address sustainability challenges, including climate change. It was sponsored by Zurich Financial Services Group Inc. and the Professional Risk Managers' International Assn. Policyholders of Zurich and PRMIA members comprised the survey audience.
“Zurich set up its climate office in 2008 after discussions with our customers, our employees and our regulators,” Francis Bouchard, Switzerland-based head of the Zurich climate office, said at a news conference. “A part of helping our customers with climate change is getting a handle on our own climate footprint. We've established a target to reduce our carbon emissions by 10% by 2013, and we're making progress toward that goal.”
“Climate change and public policies responding to climate change are creating new risks,” said Lindene Patton, Zurich's Washington-based chief climate product officer. “Risk profiles are changing for policyholders, and we need to better define those risks to help address them.”
Asked what effect climate regulation—such as cap-and-trade rules, taxes or subsidies to reduce greenhouse gas emissions—would have on risk management, respondents offered mixed answers. Nearly 31% said their companies would have to pay closer attention to climate risks, while 26% said they would have to change some products in response to increased liability or to take advantage of subsidies. Twenty-five percent said they would change pricing to compensate for increased risk, and 22% were not sure of the effect on risk management. About 16% said they would assess their current insurance coverage, and almost 15% said climate regulation would not affect their company.
The Ceres survey divided climate change risks into five areas: