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Law360, London (June 11, 2020, 4:03 PM BST) -- The Pensions Regulator said Thursday it is aware of the impact that the pandemic and other risks could have on the quality of work carried out by actuaries and is working with the industry to ensure retirement savers are protected.
The regulator was responding to a report by the Joint Forum on Actuarial Regulation, which highlighted eight risks for actuaries to be aware of, including the threat from climate change.
Sarah Tune, head of actuaries at the regulator, said the risks outlined in the report "could threaten retirement savings if not properly tackled. The work carried out by actuaries is vital to the financial planning and investment strategies of all pension schemes.
"We are alive to the areas flagged in the report, and continue to work closely with the industry to ensure savers remain protected," Tune added.
The joint forum operates under the umbrella of the Financial Reporting Council but was created with input from the regulator, known as TPR, the Financial Conduct Authority, the Institute and Faculty of Actuaries and the Prudential Regulation Authority.
It found in its report that the COVID-19 pandemic could have a systemic impact, radically altering the "scenarios normally used in actuarial models."
"The current coronavirus pandemic highlights the importance of identifying and managing risk," Jon Thompson, chief executive of the FRC, said. "It will understandably introduce additional risk and uncertainty into the work of actuaries."
The joint forum report said that it is "still too early to be definitive" about what actuaries could learn from the pandemic, but said it would prepare guidance.
"At an appropriate time in the near future JFAR will consider the impact of COVID-19 on the work of the actuary subsequent to the pandemic and decide on an appropriate action," the report added.
The report however said climate change is the biggest threat to the work of actuaries, who prepare statistical models on risk.
The joint forum said businesses face risk linked to the changing climate from physical damage, but also "transition risks" as models shift away from fossil fuel industries.
"We believe that climate-related risk may be the defining risk of our times," the report added.
--Editing by Ed Harris.
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