Emerging Risks in the Health Sector from Changing Species Distributions and Seasonality

Project: Research project

Project Details


Emerging Risks in the Health Sector from Changing Species Distributions and Seasonality Emerging Risks in the Health Sector from Changing Species Distributions and Seasonality An ecosystem is a community of living organisms in conjunction with the nonliving components of their environment, interacting as a system (see [1]). Seen from the perspective of human society the ecosystem performs multiple functions of value. This includes the production of resources such as food and water and the regulation of biological processes such as crop pollination and disease outbreaks (see [2]). To date, in risk models, actuaries and insurers have treated ecosystem functions as stable and impenetrable but above all as an invisible background. Conventionally, the main categories of risk of interest for actuarial and insurance communities include mortality, health, property, and casualty, with cyber risks and risk related to autonomous vehicles as additional emerging concerns. To an extent, the risks related to climate change, reflected in property and casualty considerations, were risks born of natural hazards such as thunderstorms, hurricanes, floods, wildfires, tornadoes as well as perils such as flash floods and heavy rainfall. Unfortunately, the global effects of economic development and climate change on ecosystems are rendering the above approach increasingly inadequate. An account of the full scale of financial risks facing the economy due to failures of ecological functions is necessary. We will consider an ecosystem function risk to be risk of financial loss due to degradation of an ecosystem function. Thus, collectively, across multiple ecosystem functions, we refer to multiple ecosystem function risks and their interactions as systemic ecosystem risk (ecosystemic risk for short). Specifically, ecosystemic risk is a risk of financial loss due to degradation of multiple ecological functions. In the extreme, ecosystemic risk can manifest itself as the complete failure of an ecosystem, i.e. all its functions. Both ecosystem function risk and ecosystemic risk can be either localized or global in nature. Being the consequence of interactions among highly interconnected complex systems, ecosystemic risk is challenging to quantify. Ecosystems are characterized by high degrees of non-linearity, resulting in so-called tipping points, which lead to sudden and dramatic shifts in system behavior. Climate change and accelerating human development are rapidly pushing ecosystems past known and unknown tipping points, challenging long-held actuarial assumptions about the place of ecosystems in their deliberations. In the future, the profitability or even solvency of insurers will depend on an ability to accurately discern between conventional and ecosystem (systemic or function) risks and to develop proper pricing models for the latter.
Effective start/end date1/1/216/30/21


  • Society of Actuaries: $9,200.00


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