Gimar special topic edition the impact of climate change on the financial stability of the insurance sector

1.3 STRUCTURE
The remainder of this report is structured as 
follows:
»
 
Section 2 describes how the insurance sector 
may be affected by climate-related risks and 
provides insight into the potential financial 
stability transmission channels
»
 
Section 3 discusses the approach taken in 
assessing the insurance sector’s investment 
exposures to climate-related risks and presents 
the outcome of the data collection
»
 
Section 4 presents an exploratory scenario 
analysis as a forward-looking perspective on 
the risks
»
 
Section 5 discusses initiatives and measures 
taken by the private and public sectors in 
addressing climate-related risks in the insurance 
sector (with a focus on risks to insurers’ assets)
»
 
Section 6 presents the conclusions and work 
planned for the future. 

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09
09
2. CLIMATE CHANGE 
AND FINANCIAL 
STABILITY RISKS 
F
igure 1 illustrates a generic chain 
of events.
6
It presents a conceptual 
framework from the perspective of an 
insurer’s balance sheet and outlines the sources, 
transmission channels, potential spillovers and 
feedback loops for climate risks to materialise. 
The framework shows how a potential systemic 
impact could be created, without expressing the 
probability that this chain of events will occur 
and abstracting from regulatory mechanisms 
and interventions that could dampen or interrupt 
the chain of events. 
Figure 1:
Impact of climate change on insurer’s assets and spillover effects
Sources of 
climate risks
Transition risks