Supervisory approach in the light of sustainability risks

Alberto Corinti, a member of the Board of Directors of the IVASS, discusses the supervisory approach concerning sustainability risks.
He highlights that sustainability-related events and risks associated with the green transition can have adverse impacts on both insurers‘ liabilities and assets.
As the insurance industry plays a crucial role as a risk-taker and institutional investor in promoting a sustainable world, supervisors find it increasingly challenging to separate these perspectives.
Corinti emphasizes the importance of providing a visible and reliable contribution to sustainable factors to safeguard the company’s value and reputation.
Strategic risks are influenced by how a company characterizes its sustainability objectives and operations, while compliance risks from complex sustainability regulations should not be overlooked. Consumer protection, from a supervisory standpoint, now includes ensuring individuals‘ protection needs are met and sustainable objectives are achieved.
To pursue these goals practically, supervisors must have in-depth knowledge of relevant phenomena and their associated risks and opportunities. Collecting qualitative and quantitative evidence is crucial, but challenges remain in improving data collection and usage for both companies and regulators.
Supervisors are encouraged to raise awareness of these phenomena within the insurance service’s target audience and foster insurance education. Additionally, supervisors play a critical role in developing new tools, requirements, and risk metrics to address complex sustainability challenges effectively. A simplified relationship between authorities and supervised entities would help face new challenges without unnecessary burdens.
In conclusion, the journey towards sustainability is demanding for supervisors, requiring commitment, perseverance, common sense, and balance.