Guy Carpenter Launches Suite of Climate Advisory and Modeling Services

Guy Carpenter & Co., the reinsurance business of Marsh McLennan, announced the launch of a suite of climate advisory and modeling services, as companies look to develop and integrate robust climate change strategies into their overarching environmental, social and governance (ESG) programs.

Climate change is increasingly influencing the frequency and severity of natural catastrophe perils with physical climate risk creating both acute and chronic threats, said Carpenter. In tandem, the shift to a less-polluting lower-carbon economy is spawning multiple transition risks, while failure to manage these physical and transition exposures is generating the potential for liability risks.

To enable its clients to navigate the multitude of challenges created by this environment, Guy Carpenter has established an integrated range of services designed to address multiple facets of physical and liability risk, while at the same time partnering with other Marsh McLennan businesses to also tackle transition risk.

Key Marsh McLennan services include:

• Physical risk modeling – natural hazard risk assessment and risk modeling, exposure data enhancement, adjustment of catastrophe models
• Risk governance and regulation – capital modeling and solvency capital requirement calculations, regulatory compliance processes
• Risk transfer – traditional risk transfer, parametric instruments and catastrophe bonds
• New institutional arrangements – advice on public risk transfer solutions and public/private partnerships
• Insurance solutions – risk underwriting for new technologies and infrastructure.

“The myriad challenges resulting from climate change have initiated action, with early adopters seeking to demonstrate best-in-class responses to these issues,” commented Peter Hearn, CEO of Guy Carpenter, in a statement.

“To reach that level, clients must gain clarity around critical areas such as their physical exposure to climate risk, how they manage transition risk, how they address potential liability risk, and how they underwrite towards greener outcomes. By offering this wide spectrum of climate-focused services and collaborating with the wider Marsh McLennan businesses, we can help our clients achieve that clarity,” he continued.

Guy Carpenter said it is “uniquely positioned to help its clients understand which perils and regions are most at risk due to climate change.”

By using catastrophe modeling tools suitable for different future time horizons and warming assumptions, geographic accumulations of risk and/or underwriting, it can enable companies to quantify the impacts under potential climate scenarios on the overall volatility and tail risk of their insured portfolio.

By applying a combination of modeling techniques, proprietary risk assessments and the latest in scientific research, clients can prioritize their climate-related activities, while also benchmarking the success of their approach against industry peers.

Working in tandem with Marsh, Oliver Wyman, and Mercer, Guy Carpenter is also able to provide services to its clients that span several other climate-related areas. These services include transition risk modeling, climate investment portfolio modeling, asset-level resilience surveys and scoring, and commercial due diligence.

“Managing climate risk is becoming an increasingly prominent component of an organization’s overarching environmental, social and governance approach, with the majority of our clients expressing a strong desire to develop robust strategies on this front,” said Dean Klisura, president, Guy Carpenter.