Understanding the Key Challenges and Opportunities in Creating Climate Transition Pathways

Rakhi Kumar (), Kelly Hereid () and Victoria Yanco ()
Additional contact information
Rakhi Kumar: Liberty Mutual
Kelly Hereid: Liberty Mutual
Victoria Yanco: Liberty Mutual

Journal of Financial Transformation, 2022, vol. 56, 28-36

Abstract: Climate change poses an interconnected set of risks to the economy, from both the transition to a new mix of renewable energy sources and the physical hazards driven by a warming planet. The complexity of the upcoming transition requires a systems-level approach that leverages the strengths of existing modeling tools, paired with a strategy built on proactively identifying gaps and silos in out-of-the-box analytical solutions. Liberty Mutual brings a unique view from the insurance space on breaking down modeling silos, pairing the physical implications of climate disasters derived from catastrophe and climate modeling along with macroeconomic studies based on research from the Network for Greening the Financial System (NGFS). This paper details the challenges presented by this current climate risk modeling environment and suggests practical strategies for making climate risk actionable as organizations plan their transition to a low-carbon future. We find a clear mismatch between the disparate and path-dependent energy transitions expected across global economies and common climate commitments found in the financial services sector, which risks unintended adverse effects in the speed and equity of the climate transition. Developing a holistic view of climate impacts that ties physical, economic, social, and biodiversity impacts together and places them at the point of decision-making is a strategy that is broadly applicable both within and beyond the insurance sector.

Keywords: Climate; Natural Disasters and Their Management; Global Warming; Environment and Development; Sustainability; Energy Environmental Equity; Financial Risk and Risk Management; Energy and the Macroeconomy; Criteria for Decision-Making under Risk and Uncertainty; Insurance; Insurance Companies (search for similar items in EconPapers)
JEL-codes: Q54 Q56 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:jofitr:1691

Access Statistics for this article

Journal of Financial Transformation is currently edited by Prof. Shahin Shojai

More articles in Journal of Financial Transformation from Capco Institute 77 Water Street, 10th Floor, New York NY 10005.
Bibliographic data for series maintained by Prof. Shahin Shojai ( this e-mail address is bad, please contact ).