"As the importance of climate change risks grows, it is critical that actuaries consider these risks in their work," said Mark Babington, executive director of regulatory standards for the Financial Reporting Council, in a statement Wednesday.
The move comes as regulators and insurers around the world become increasingly concerned about climate risk as natural disasters become more common. According to a BlackRock Inc. survey conducted last year, climate risk will have a significant impact on how insurance executives build their portfolios over the next two years.
According to the statement, the FRC discovered that actuaries do a good job of taking into account more established risk areas, but do less well of considering non-traditional risks such as climate change.
The FRC's public consultation on the proposed changes ends on September 7.