Insights from Quadrant

Pick a risk, any risk

In Germany in 1923, they burned money the old-fashioned way.

In the comments below Michael Kile’s Climate Hysteria: Follow the Money, reader Alice Thermopolis notes the mounting enthusiasm for climate change action of Reserve Bank Deputy-Governor Guy Debelle, as reported by the AFR.

Dr Debelle also highlighted climate risk as an area of concern in the long term for risk managers especially because it was hard to actually assess the risk.

“Climate is a challenging risk to assess but an increasingly necessary one,” he said.

“As risk managers, you can bring your skills at calculating the expected future value of financial assets across a number of potential scenarios. In that sense, climate risk is not that different from other risks, though the challenge of translating uncertain future paths for the climate into paths for the economy and the prices of financial assets is harder than some of the other risks that you generally deal with.”

As Alice wishes, more due diligence, Deputy-Governor.

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