I can’t fathom that my last post was in January. Where does time go? Throughout this year, I have drafted several posts, worked on models and exhibits, but never finished anything to publish. Either I got distracted, the relevance of the point passed, I read something that made the point more elegantly than me, or I simply forgot. I seem to have got out of the habit of posting, focusing on other things, which is fine but something I’d like to get back to in 2022.
Anyway, the reason for this post is that as we approach the end of the year, I wanted to share a webinar and a website that I have found particularly insightful and useful this year. As the threat from COVID seemed to be abating, prior to the new Omicron strain emerging (which itself will hopefully pass), and the fall from grace of populist tendencies (the increasing nakedness of emperors like Boris and the Brexiteers’ fantasies becoming all too apparent), attention for a brief period this year was focused on the real issue of our time – climate change. Like me, I am sure you have also attended many webinars this year on a range of topics. It is such a pleasure to dip in and out of events that previously would have required time-out travelling to be only disappointed by some blatant marketing presentation posing as an expert session on a topic of the day! Well, my webinar of the year goes to a chap called Spencer Glendon who presented at a Milliman’s climate change conference. The session below is a follow-up to the main conference, but I found Spencer particularly insightful here. I would highly recommend that you spend the hour listening to this guy.
I would also recommend the non-profit website that he founded; it’s called https://probablefutures.org/. The blurb on the site is that it “offers interactive maps of future climate scenarios using widely accepted climate models, along with stories and explanations designed to help you understand our changing world.” I have found it useful in my work but also thought provoking as we all grapple with what our new shared future will be.
Long time no see. Good to see you are back. Indeed, the year went by like anything…
Some time ago I started digging a bit into climate models. Probably you know this better than me but what made me scratch my head was that there was a significant number of them (mid-30s I think) and that the results were quite different. Unlike in finance were you can say half a percent give or take is “normal” here half a degree centigrade means quite a lot. And some variations were well above that. Which made me think how hard this problem seems to be or maybe just badly conditioned (similar to calculating the intersections of two lines with a very small angle between them – get one line slightly wrong and the intersection is all over the place).
Anyway, good to see that you are still around!
Good to hear from you, hope all is well with you these days. Time just flying..
You are spot on about the models. Currently there is a lot work ongoing on trying to merge the benefits of the cat models and the climate change models. The cat models tend to be calibrated on exposure adjusted historical data whereas the challenge is to adjust history based upon the projections coming from the macro climate change models used by IPCC. That Milliman climate change conference had a few good sessions on the topic (I have nothing to do with Milliman so not selling them per se) https://www.milliman.com/en/insurance/2021-Milliman-Climate-Resilience-Forum-Video-Library
The thing I liked about the Glendon session is that he highlighted that there is a lot of uncertainty about the future but the one model that is 100% wrong is the one that ignores climate change and assumes the future will be like the past. If your business model is based upon the past trends then you are in big trouble!! Cheerful stuff!!! I know the long term debt markets and the mortgage markets are grappling with disclosures on climate change, like us all! I’ve used the probable futures maps a few times in presentations. Interested in any useful insights that you come across, let me know.
All the best. M