-
Aviation Advisory
Our dedicated Aviation Advisory team bring best-in-class expertise across modelling, lease management, financial accounting and transaction execution as well as technical services completed by certified engineers.
-
Consulting
Our Consulting team guarantees quick turnarounds and superior results delivered on a range of services.
-
Business Risk Services
Our Business Risk Services team deliver practical and pragmatic solutions that support clients in growing and protecting the inherent value of their businesses.
-
Deal Advisory
Our experienced Deal Advisory team has provided a range of transaction, valuation, deal advisory and restructuring services to clients for the past two decades.
-
Forensic Accounting
Our Forensic and Investigation Services team have targeted solutions to solve difficult challenges - making the difference between finding the truth or being left in the dark.
-
Financial Accounting and Advisory
Our FAAS team designs and implements creative solutions for organisations expanding into new markets or undertaking functional financial transformations.
-
Restructuring
Grant Thornton is Ireland’s leading provider of insolvency and corporate recovery solutions.
-
Risk Advisory
Our Risk Advisory team delivers innovative solutions and strategic insights for the Financial Services sector, addressing disruptive forces, regulatory changes, and emerging trends to enhance risk management and foster competitive advantage.
-
Sustainability Advisory
Our Sustainability Advisory team works with clients to accelerate their sustainability journey through innovative and pragmatic solutions.
-
Corporate Accounting and Outsourcing
At Grant Thornton we have extensive knowledge and experience in providing tailored solutions to our clients, whether on a short-term or long-term basis.
-
Financial Services Audit
Our Financial Services Audit team offers expertise and knowledge along with a horizontal approach to solving clients’ problems and queries.
-
Global Statutory Audit
Our Global Statutory Audit team ensures your statutory audit process follows a well-defined project plan, with no surprises, to maintain compliance across multiple jurisdictions. We invest time to understand your finance function and develop bespoke solutions built on the premise of central effort to remove duplication.
-
Pension Audit
The Grant Thornton Pension Audit team has vast experience in managing schemes and preparing annual reports on them for clients.
-
Corporate Tax
Our Corporate Tax team is made up of more than 40 highly experienced senior partners and directors who work directly with a wide range of domestic and international clients; covering Corporation Tax, Company Secretarial, Employer Solutions, Global Mobility and Tax Incentives.
-
Financial Services Tax
The Grant Thornton team is made up of experts who are fully up to date in terms of changing and evolving tax legislation. This is combined with industry expertise and an in-depth knowledge of the evolving financial services regulatory landscape.
-
Indirect Tax Advisory & Compliance
Grant Thornton’s team of indirect tax specialists helps a range of clients across a variety of sectors including pharmaceuticals, financial services, construction and property and food to navigate these complexities.
-
International Tax
We develop close relationships with clients in order to gain a deep understanding of their businesses to ensure they make the right operational decisions. The wrong decision on how a company sells into a new market or establishes a new subsidiary can have major tax implications.
-
Private Client
Grant Thornton’s Private Client Services team can advise you on all areas of financial, pension, investment, succession and inheritance planning. We understand that each individual’s circumstances are different to the next and we tailor our services to suit your specific needs.
Receive the latest insights, news and more direct to your inbox.
This article explores the responsibilities of the HoAF in the context of climate change, the requirements set by the Central Bank of Ireland (CBI), and the evolving landscape of climate-related risk management, including the latest guidance from the Institute and Faculty of Actuaries (IFoA).
Central Bank of Ireland Requirements
In March 2023, the CBI laid out clear guidelines for (re)insurers on managing climate change risks:
- Iterative Integration: The CBI expects (re)insurers to gradually integrate climate change risks into their governance and risk management frameworks, treating them as key risks.
- Double Materiality: (Re)insurers must consider how climate change impacts them and how they impact the climate (inside-out and outside-in perspectives).
- Time Horizons: Climate risks should be assessed over short (0-10 years), medium (30 years), and long-term (80 years) periods, in line with EIOPA guidelines.
- Local Adaptation of Group Policies: If group policies are used, they must be tailored for the local entity to ensure they’re relevant.
Responsibilities of the HoAF
The HoAF is integral to the Own Solvency Risk Assessment (ORSA) process in (re)insurance companies. Key responsibilities include:
- Actuarial Opinions on Climate Risks: The HoAF must provide an actuarial opinion to the board on climate change risks, ensuring these are considered within the ORSA process. This involves both quantitative and qualitative assessments of the risks.
- Risk Management Framework: They assess how well the (re)insurer’s risk management framework handles climate change risks, including evaluating the stress scenarios used.
- Financial Projections and Technical Provisions: The HoAF checks if the financial projections and the calculations of technical provisions are appropriate, considering any uncertainties.
- Stress and Scenario Testing: Reviewing the stress and scenario tests for climate risks is also part of their responsibilities, ensuring no significant limitations are overlooked.
HoAF's Considerations
The HoAF needs to handle various risks and time horizons in the ORSA process:
- Comprehensive Risk Coverage: They need to consider both physical risks (like floods) and transitional risks (like regulatory changes).
- Scenario Analysis: Conducting detailed scenario analyses to understand the financial impacts of climate risks over different timeframes is essential.
- Risk Driver Understanding: Climate change should be seen as a risk driver and integrated into existing risk scenarios.
Recent Changes and Developments
Significant shifts have occurred in the approach to climate change risk management:
- Climate Litigation Trends: There's an increase in climate-related litigation, pushing for greater accountability. Governments and fossil fuel companies are facing more legal scrutiny.
- CBI Guidance Updates: The CBI's 2023 guidelines emphasise a structured approach to managing climate change risks, aligning with EIOPA standards. The latest CBI newsletter also highlights the importance of incorporating double materiality into risk assessments, ensuring that both the impacts on and from the insurer are considered comprehensively.
- IFoA Risk Alert: The IFoA issued a risk alert in June 2024, stressing the importance of considering and communicating climate change impacts. This alert builds on previous guidance and underscores the need for robust scenario analysis.
- Governance and Responsibilities: The CBI expects climate risk management to be integrated into the governance framework, with clear responsibilities for the board and senior management.
- Materiality Assessment: A robust materiality assessment is required to identify (re)insurers' exposure to climate risks, considering both current and future scenarios.
- Embedding Climate Risk into Business Practices: (Re)insurers need to operationalise climate risk strategies into daily activities, aligning policies, underwriting, pricing, and investment strategies.
- Data and Modelling Enhancements: Improving data availability and modelling capabilities is crucial for better managing climate risks.
Conclusion
Managing climate change risks is a complex and essential task for the HoAF. By providing informed opinions, assessing frameworks, and ensuring robust scenario testing, the HoAF helps (re)insurers prepare for the evolving climate landscape.
Following CBI guidelines and the latest IFoA risk alert, and adopting an integrated approach to risk management, will be key to effectively navigating these challenges. This comprehensive strategy not only secures the financial stability of (re)insurance companies but also contributes to a sustainable, climate-resilient economy.