Actuaries Climate Index ™ - PowerPoint Presentation

Slide1

Actuaries Climate Index™

Guided TourSlide2

Guided Tour—What

is the Actuaries Climate IndexTM

?

The

Actuaries Climate IndexTM (ACI) is an index of climate risks not unlike the Consumer Price Index that monitors average price changes over time to a basket of standard goods and services.Actuaries measure and manage many types of risks: thus the Actuaries Climate IndexTM measures climate risks on the basis of a basket of extreme climate events and changes in sea level. Increasing values in the index point to increased occurrences of extreme climate events.

2Slide3

Guided Tour—

What is unique about the Actuaries Climate

Index

TM

? (cont’d) The Actuaries Climate IndexTM does not explain the causes of climate change or project future changes. Its focus is on actual historical data from experience going back to 1961, collected by reliable sources.It offers in a neutral and factual way, an analytical context for exploring various impacts of recent changes in the climate focusing on perils in addition to increases in temperatures.

3Slide4

Guided Tour—What is unique about the

Actuaries Climate Index

TM

?

(cont’d)The peril components have been chosen to capture variations in the key impacts of climate indicators and allow a deeper analysis of the effects, validate expectations and quantify the variances. Thus the user can get a customized view of how climate is being affected in Canada and the United States or in a particular region.Current data will be collected and loaded into the site each quarter. Regular visits to see if the Actuaries Climate IndexTM number, or a specific component, has gone up, down or stayed the same will keep you informed of potential changes in risks in your area or in regions of interest.4Slide5

Guided Tour—Introduction

This

presentation provides a context to help you better understand what you will see on the Actuaries Climate Index (ACI) website and how to derive maximum value from using this tool.

It

offers preliminary information, definitions and answers to a few questions. Additional Frequently Asked Questions (FAQS) can be found on the website.It also offers suggestions as to how to organize your visit, taking into account your priorities and available time.5Slide6

Guided Tour—What can you learn from the

ACI?

Climate

should be defined over long periods since there are always short term fluctuations, but in more recent years, fluctuations have been more frequently up than down.

The Actuaries Climate IndexTM methodology uses a 30-year reference period of 1961 to 1990, and over that period, the average index is zero. Color coded monthly or seasonal values display a quantified measure of changes in riskiness for the index and each of its six components.6Slide7

Guided Tour—What can you learn from the index?

(cont’d)

The

5-year moving

average, which smooths out the monthly and seasonal fluctuations, has slowly risen as we move away from 1990.The user can observe that climate risks have multiple impacts and these vary by region and component, allowing for informative comparisons and analyses.7Slide8

Guided Tour—

How are the

Actuaries Climate

Index

TM values calculated? The Actuaries Climate IndexTM is the sum of component values divided by the number of components (six), so each is given equal weight. Scrolling down the six screens will show the series of values for each component:Frequency of extreme warm temperatures Frequency of extreme cold temperatures Frequency

of high winds Maximum

amount of heavy rain

Longest

period of consecutive dry days in last 12 months

Change

in sea

levels

8Slide9

Guided Tour—

How are the index values calculated?

(cont’d)

“

Extreme” refers generally to values that are in the 90th or 10th percentile. Values are measured as anomalies, which in the Actuaries Climate IndexTM context refers to the difference between a value in a given month or season and the value in the 1961-1990 reference period.More details are available in Component Definitions under the DATA drop-down menu.9Slide10

Guided Tour—

index values can be compared to the reference period

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Guided Tour—

Technical Illustration of the Standardization

P

rocess

The calculation involves two steps:Step 1: Calculating the average for the month or the season and subtracting the mean calculated for the corresponding month or season over the 30-year reference period to measure the variance.Values for components are in different units: frequency, number of days, millimeters of rain, etc., therefore cannot be added directly. Standard deviations are a common measure of risk, so components values are converted to this measurement.11Slide12

Guided Tour—

Technical Illustration of the Standardization

P

rocess

The calculation involves two steps:Step 2: Dividing the difference by the standard deviation from the reference period converts component values into standardized values that can be added together because they are expressed in a common unit of measurement: Units of Standard Deviation (SD).These values are referred to on the index website as standardized anomalies: the difference between the component value in the month or season at hand and its average value during the reference period, 1961-1990, divided by the standard deviation of that component’s values during the reference period for that month or season ((x - µ)/ σref).

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Guided Tour—

How are the screens organized?

A

typical screen relates to the

Actuaries Climate IndexTM or a component for a region and shows the standardized monthly or seasonal values color coded plus a black continuous line for the 5-year running average. The top screen is for the aggregate selected and sub-screens display components or sub-regions. Click on one of the sub-screens and it enlarges and moves to the top.13Slide14

Guided Tour—

How are the screens organized? (cont’d)

There

are 15 screens displaying the

Actuaries Climate IndexTM for 12 regions plus the contiguous US, Canada and both countries including Alaska. For each of them there is a series of six screens covering the components. Thus in total there are over 100 screens. They can be accessed by selecting Regional Graphs or Component Graphs under the EXPLORE menu and using the drop-down

menus.

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Guided

Tour—

Sample screen

for USC with

Actuaries Climate IndexTM and a few regions15Note that the US and Canada Actuaries Climate IndexTM is not a weighted average of Canada and

US indices. Standard deviations need to be calculated over the complete set of data for the location selected. The set of data for the US and Canada is larger than either the US or Canada and consequently generates lower standard deviations. A similar comment applies to a group of regions. A lower divisor results in higher standardized anomalies.

Similarly,

the

index for

Canada or the US are not the weighted average of their regions.Slide16

Guided Tour—

Suggested exploration if this is your first visit

Read

first

the following three short overview pages on the website: “About the Actuaries Climate Index” under the ABOUT drop-down menu, “Actuaries Climate Index At a Glance” under the EXPLORE drop-down menu, and “Executive Summary” using

the link at the bottom of the At a Glance page.

2

)

Start with

the USA

&

Canada

and the aggregate

index and

then scroll down to

compare the

Contiguous

US

with Canada and the 12 regions by selecting

Regional Graphs under

the

EXPLORE drop-down menu.

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Guided Tour—

Suggested exploration if this is your first visit (cont’d)

Select

Component Graphs

also under the EXPLORE drop-down menu to look at components for USC.Use the Regional Graphs link under the EXPLORE drop-down menu to look at components for Canada or US or a particular region. If you select MAPS, you will see an animation of what has happened in all the regions, by season, since 1961. Once the animation ends, you can click on a region, and it will be outlined, as will the standard deviation in the Legend, for the latest season.17Slide18

Guided Tour—

Suggested exploration if this is your first visit (cont’d)

5)

After a quick tour of regions or components you may be motivated to read explanations in other sections of the

website or come back to specific screens.More detailed methodological information is available in the Development & Design document to be accessed from another link at the bottom of the first page under the ABOUT drop-down menu. Numerical examples are available in the Sample Calculations document under the ABOUT drop-down menu. It maybe useful to consult the Sample C

alculations when you have a question about a particular component

.

Data can be downloaded for further analysis under the DATA drop-down menu. For details, see the

Data Downloads

.

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Guided Tour—

Suggested exploration if this is your first visit (cont’d)

6

)

Comments and suggestions are welcome at info@actuariesclimateindex.orgIf unexpected results appear, you can type the appropriate keyword in the SEARCH function in the upper right corner of the website which may direct you to a relevant extract or FAQ. You can also send an email to the address above. 19