Climate scenarios require complex considerations and calculations, but these elements can be arranged in a simple and clearly-defined approach. This story appeared recently in Solvency II Wire, a website that offers commentary and analysis from experts, analysts, and regulators. The article lays out a pragmatic path that insurers can use to begin the journey, with the following steps:
- Qualitative assessment
- Framing the narrative
- Qualifying the impact on the business
- Reverse stress testing climate scenarios
- Effective scenario analysis