S. Africa Launches 1st National Climate Index to Monitor Weather Risks

South African actuaries have launched the country’s first national climate index to better manage losses caused by the increasing frequency of droughts, wildfires, floods, and other extreme weather events.

Actuaries, financial and statistical experts specializing in risk assessment, use mathematics, statistics, and probability theory to estimate and analyze future financial risks, particularly in insurance, pensions, investments, and risk management sectors.

The new, freely accessible index was developed for the Actuarial Society of South Africa and will be updated quarterly.

It allows users to measure the frequency of specific extreme weather events relative to a 30-year baseline period spanning from January 1, 1991, to December 31, 2020.

Rendani Mbova, the lead developer and actuarial expert behind the project, said in an emailed statement: “Anyone interested in analyzing and comparing different climate data sets will benefit from this index, which provides users with valuable insights into climate trends across South Africa and their potential impacts on various sectors.”

During the testing phase, Mbova explained, historical loss data from two major short-term insurance companies were compared to the index’s records, revealing a direct correlation between loss events and patterns of extreme weather.

Users will be able to track unusual rises or drops in temperature, periods of excessive rainfall, and the severity and duration of droughts dating back to January 1981.

Mbova expressed hopes to expand the index’s scope to include predictive climate scenarios and broader geographic coverage across other African nations.

“We hope this index becomes a widely used tool for supporting climate-informed decision-making across insurance companies, financial institutions, and potentially beyond the financial sector,” she said.