The Financial Reporting Council is seeking comments on proposed amendments to its rulebook for actuaries that will force them to take more account of climate-change and ESG risks in their work.
The changes form part of an update to Technical Actuarial Standard 100 100: General Actuarial Standards.
Mark Babington, the FRC’s lead on regulatory standards, said: “Actuaries have a key role to play in considering risks and modelling of future events so that users of actuarial information can make informed decisions about material risks.
“As the importance of climate change risks continues to grow it is critical that actuaries consider these risks in the course of their work.”
He added that the planned amendments will help make sure that actuarial work remains relevant in a rapidly changing environment.
The FRC explained in the consultation that its own feedback suggests that although actuaries routinely consider traditional risk areas, they have tended to put less emphasis on novel and emerging risks.
Under the proposals’ new requirement, actuaries will be expected to consider all material risks as they perform their role – including climate change and ESG linked risks – that they might reasonably be expected to have known about when they worked on a matter.
Actuaries will also be expected to indicate which risks they have identified.
A recent study from the Institute and Faculty of Actuaries (IFoA) recently warned of a lack of focus on climate-related risks in many areas of actuarial practice.
The consultation on new responsibilities for actuaries comes at a time when actuaries are likely to become more involved in modelling work on climate change and pandemic modelling amid the growing importance of data science.
The FRC has also signalled in the consultation document that it plans to issue modelling guidance at a future date.
Interested parties have until 7 September 2022 to submit their comments to the FRC.
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