The Actuaries Institute has launched a climate index, an objective measure of extreme weather conditions and changes to sea levels, to help policymakers and Australia’s businesses assess how the frequency of weather extremes is changing over time.
The Australian Actuaries Climate Index, which includes a number of sub-indices, tracks changes in the frequency of extreme high and low temperatures, heavy precipitation, dry days, strong wind and changes in sea level, mainly concentrating on the 99th percentile of observations.
The components of the index were chosen due to their link to risk, an area of expertise for actuaries, and because extremes have the greatest potential impact on people and, often, the largest cost to the economy.
The index is the culmination of an extensive research and implementation process. It is the result of consultation with Australia's Bureau of Meteorology, Commonwealth Scientific and Industrial Research Organisation (CSIRO), leading insurance and natural hazard scientists and regulators.
Actuaries are experienced in the assessment and management of the financial consequences of risks and in the summarisation and presentation of complex data Many of the organisations that Actuaries support are concerned with climate risk and with how it will affect their business - for example general insurers, banks and investment managers. The index is intended to provide a useful measure of how the extremes of weather are changing in order to support assessment of the change in risk.
Tim Andrews, Principal at Finity Consulting, led the team who collated the index, using data from the Bureau of Meteorology’s extensive network of weather stations and tide gauge facilities. The data was collected nationally and grouped into 12 climatically similar regions.