Rostin Behnam, a commissioner of the U.S. Commodity Futures Trading Commission (“CFTC”), warned of the effects of climate change on insurers and other participants in the derivatives markets in a recent presentation before the Market Risk Advisory Committee.
In his prepared remarks, Commissioner Behnam explained that worldwide economic costs from natural disasters have exceeded the 30 year average of $140 billion in seven of the last 10 years, and that in 2018 the total cost was $160 billion.
He added that the commodity markets and the financial markets that support them “will suffer if we do not take action to mitigate the risk of contagion.” Moreover, Commissioner Benham said, “[a]s most of the world's markets and market regulators are taking steps towards assessing and mitigating the current and potential threats of climate change, we in the U.S. must also demand action from all segments of the public and private sectors, including this agency.”
In particular, the commissioner pointed out that “the impacts of climate change affect every aspect of the American economy.”
The commissioner noted that the “human element” of extreme weather events was “real and heart wrenching.” He said that the “economic element” was also just as real:
Risk exposures to insurance providers, asset managers, pension funds, commercial and retail banks – all users of derivatives markets – to price and shift risk, cannot be understated. But, ultimately, the final risk often weighs on farmers, investors, customers, consumers, and homeowners. We, collectively, must act now to address the persistent risks posed by climate change.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].