b'INSURANCE REGULATORY|US/NAICin natural disasters, (3) a disorderly transition withWhile the NYDFS acknowledges that many a drastic increase in natural disasters and (4) noaspects of climate change (and governmental transition (as the economy continues to use theand societal responses to such changes) remain same amount of fossil fuel) with a drastic increaseunknown, its position is that uncertainty and data in natural disasters. gaps do not justify inaction. The NYDFS specifically calls upon insurers to adapt their Group-Level Approach Is Acceptable traditional tools for identifying, monitoring and The Guidance notes that an insurer that is part of amanaging risks.group can utilize policies, procedures and processes developed at the group level forAttention at the Board and Senior managing climate risks if: (1) the risks considered atManagement Levelthe group level include those facing the insurer; (2)The NYDFS emphasizes the importance of climate the policies, procedures and processes developedrisks receiving attention at the board and senior at the group level are implemented at the level ofmanagement level. Accordingly, the Guidance the insurer and address the insurers materialrequires the designation of: (1) a board member or climate risks; and (3) the insurer has appropriateboard committee (at either the individual insurer access to relevant climate-related resources andlevel or the group level) to be responsible for expertise centralized at the group level.overseeing climate risks (even if climate risks are not considered to be material currently) and (2) a Taking a Longer-Term View member of senior management as responsible for In the Guidance, the NYDFS states that, in its view,the management of climate risks. The Guidelines a strategic response to climate change requires aalso require, with respect to an insurers longer-term view than the typical business planningorganizational structure: (a) management of climate horizon of three to five years. Instead the horizon forrisks through existing enterprise risk management analyzing financial risks and opportunities related tofunctions; (b) the clear definition and articulation of climate change should expand over time to aroles and functions, processes and procedures medium-term (e.g., 10 years) and ultimately long- pertaining the management of climate risks; (c) term (e.g., 30 years) view. The NYDFSs expectationobjective, independent and regularly conducted for the timing of this progression will depend on theinternal reviews; (d) the development of climate risk situation of each insurer, with insurers with the mostexpertise at the board and employee levels; and developed climate-related risk profiles expected to(e)the consideration of remuneration to align start experimenting with the long-term horizon now,incentives with strategy for managing climate risks and other insurers expected to do so in the nextand with performance against climate metrics.two to three years. The NYDFS notes, though, that when making specific business decisions, eachAdopting a Written Risk Policyinsurer should consider climate risks based on aIn addition, the Guidance requires a New York time horizon that is tailored to its business anddomestic insurer to have a written risk policy activities and the nature of that decision. adopted by its board, governing how it manages material climate risks. Factors to be considered in 88|Global Insurance Industry Year in Review 2021'