BOE's Carney Sees Risks to Climate Change Management

The transcript discusses the impact of climate change on risk management, particularly in the context of monetary policy and insurance. It highlights the concept of the 'tragedy of the horizon' and how short-term financial horizons often overlook climate risks. The text explains how the insurance industry adapts to climate change through pricing and coverage adjustments. It also addresses future risks, such as changes in government policy and technology, and how markets anticipate these changes. The importance of having information for capital allocation and qualitative judgments about management and risk management is emphasized.

What is the 'tragedy of the horizon' in the context of climate change?

• A method to predict climate change impacts

• A short-term focus that neglects long-term climate risks

• A financial strategy to mitigate climate risks

• A policy to extend financial horizons

How does the insurance industry respond to climate change?

• By increasing premiums only

• By ignoring climate risks

• By adjusting pricing and coverage

• By reducing coverage options

What role do supervisors play in the insurance industry's adaptation to climate change?

• They prevent any changes in coverage

• They set fixed prices for insurance

• They ignore the industry's strategies

• They ensure the industry is effectively managing climate risks

What can cause significant shifts in industries according to the third section?

• Stable government policies

• Technological stagnation

• Changes in government policy and technology

• Lack of market anticipation

Why is it important to anticipate changes in policy and technology?

• To allocate capital effectively and manage risks

• To avoid any market changes

• To ensure no competitive shifts occur

• To maintain current market positions