A research report entitled "Exploring the Climate Change Impacts on Drought Occurrence (Past-Future) in the World and Iran; Drought Risk Zoning: An Insurance Industry Approach" has been recently released by IRC that presents the preliminary concepts of drought and climate change and explores the direct and indirect impacts of the droughts and the role of climate change in that process, according to PRIAO, IRC. In this report, the studies related to the local risk mappings and the risks posed by the climate change on the intensity and frequency of drought is explored.
According to this study report, the increase in fossil fuel consumption, forest destruction, and land use conversion have brought about a rise in greenhouse gases, change to the atmospheric radiations balance, global warming and worldwide climate change. The natural hazard related losses are the most significant threats facing the insurance industry and understanding the threats related to climate change and identifying the quality and quantity of the risks associated with these hazards in order to assess and determine the losses incurred are highly significant.
Human health, ecological, economic, and social systems vital for achieving sustainable development are vulnerable to climate change. Developing countries are more prone to the risks of climate change due to their lower capacities and these conditions are even worse in poor countries.
Based on the findings of this study, moving from crisis management to risk management in order to minimize the negative impacts of droughts is inevitable. In this regard, risk management includes reduction in natural catastrophe impacts, response preparedness, anticipation and projection of natural catastrophes before their occurrence and this must be regularly perfumed (and not just in drought conditions). In the same vein, establishment of a universal natural catastrophe fund is a significant stride and issuing Nat Cat bonds is another strategy for natural catastrophe risk management. In this respect, employing drought indices in order to quantify the drought risks, local currency estimation of the incurred losses and determining premiums for the insurers are also noteworthy for consideration.
It must be noted that in future reports, various aspects of these issues will be explored such as analyzing the climate change impact on various climate parameters and the likelihood of natural hazard occurrence, accurate evaluation and rating of climate risks, novel climate change related insurance products, identifying the conditions, the strategies and policies employed by other countries in relation to the climate change impact on their insurance industry, adaptation of the strategies with the current state of the country, and mapping out effective strategies in Iran. The current report is considered as a preliminary work for the future reports.
The Persian full text of the research report is available at this link.