The risk of global weather connections

This report analyses the links between extreme weather events occurring in separate regions of the world that can take place over a range of timescales from days to years (known as teleconnections).

It is an insurer’s responsibility to assess that levels of capital are adequate for all material risks and demonstrate that to the regulators. Many use internal models to show this is the case. For assessment of teleconnections, these internal models are based predominantly on the assumption that extreme weather events in different regions occur independently of each other.

Lloyd’s worked with the Met Office to develop this innovative study, which for the first time analyses the potential links between weather events globally; existing methodologies cover single regions only. This allows reinsurers to use the report to model scenarios across their global portfolios.