Evaluating Climate Change Resilience and Adaptation Initiatives and Programs

Background and Purpose

In 2024, 27 disasters in the United States resulted in damages exceeding $1 billion. These disasters included two winter storms, one wildfire event, one drought/heatwave event, one flooding event, six tornado outbreaks, 11 severe weather/hail events and five hurricanes. The costliest of these events was Hurricane Helene, which resulted in 219 deaths and cost $79.6 billioni, although the early 2025 wildfires in the Los Angeles, California area threaten to exceed this economic cost. In Canada, insured catastrophic losses totaled C$8.5 billion in 2024, making it the costliest year on record for the country. Outside the United States and Canada, Cyclone Chido killed more than 1,000 people, a heatwave in Bangladesh impacted 33 million people and a drought in Columbia has had a significant impact on the economy thereii.

Many organizations and individuals are committed to minimizing the impact of and building resilience against events like these and countless less dramatic ones. Examples of such efforts include:

Louisiana strengthened its building codes following Hurricane Katrinaiii
New York City implemented the Be a Buddy program in 2018 which is designed to connect volunteers with vulnerable populations to help them find resources, like cooling spots, during a heat emergencyiv.
In Florida, there are efforts to build hurricane-proof communities. One such community, Hunter’s Point, was able to withstand the effects of Hurricane Helenev.
In Canada, the federal government launched a Disaster Mitigation and Adaptation Fund in 2018, to invest in structural and natural infrastructure projects, aimed at strengthening the resilience of communities, mitigating risks to health and safety, minimizing economic activity disruptions, and reducing the escalating costs of recovery and replacement efforts.

Of course, before implementing an adaptation initiative or program to enhance resilience, decision-makers will have to address several key questions, such as:

“What are the expected direct costs and off-setting savings?”
“Which stakeholders bear these costs currently?”
“How are these costs expected to evolve over time?”
“How can we quantify the return-on-investment for risk reduction / resilience enhancement initiatives?”
“How will this impact the target population?”

After the fact, key questions include “How well did the initiative perform relative to expectations?” and “What can we learn from this process?”.

The analysis of an adaptation of one or more properties could be conducted for an entity such as an insurance company developing underwriting or pricing credit criteria, a government entity determining minimum building standards, or a business or household deciding how much should be spent to meet a certain level of assurance in building or property resilience. An actuary could be involved in assessing the amount of credit that could be given in the underwriting process for an insurance exposure. In particular, it can be challenging to interpret the publicly available research on the cost-benefit of resilience initiatives, in the context of reducing insured losses – as many studies encompass a broader range of economic losses (both insured and uninsured losses; direct damage to property; indirect losses resulting from reduction in economic activity; impacts on the tax base; health and other personal impacts; etc.).

Research Objective

The Society of Actuaries Research Institute (SOA) Catastrophe and Climate Strategic Research Program is seeking researchers to provide decision-makers with a roadmap for answering the questions described above. The entity analyzing one or more policies with respect to an initiative or investment regarding an adaptation initiative or program could include a public standard-setting program, a business or household deciding on the type or extent of resilience desired, a government entity assessing potential initiatives for funding risk reduction, or an actuary or underwriter deciding how much credit should be given to various levels of resilience.

A few comments about the roadmap:

The report should include a survey and/or a typology describing the range of current resilience and adaptation initiatives used globally.
This roadmap should include a survey of actuarial methods that a decision-maker might use to evaluate a potential initiative's direct costs, expected savings, and predicted outcomes. Proposed use of artificial intelligence (AI) for predicting outcomes of mitigation programs would be valuable to have.
Methods included in the survey may include:
Simple budget impact models for initiatives that are relatively immaterial to the decision-maker
Statistical methodologies like the Index Method, which compares results before and after a specific event, and/or the Propensity method, which compares results between comparable situationsvi.
AI and/or machine learning methods such as the XGBoost model, which is often used for regression, classification, and ranking tasks
Risk-adjustment techniques similar to those used in healthcare analyticsvii.
Discounted cash flow analysis using real option theory
Scenario generators
The methods listed above are not meant to be exhaustive and the authors may include other methods. Similarly, not all of the methods listed above are required to be included, with the exception of machine learning methods, like AI and scenario generators.
The roadmap should include methods for evaluating the impact of an initiative or program on the impacted population, like the value-stack methodology, which uses proxy measures to monetize qualitative effects, and a winners-losers methodology, which quantifies the impact of the effort on individuals.viii
The description of each method included in the survey should include an analysis of the pros and cons of the methodology, a hypothetical or real-life case study of how the method might be applied, a discussion of considerations for choosing assumptions, and recommendations as to where to go for more information, including readily available public information and proprietary information.
The methodology should enable users to parse out the anticipated cost savings / reduction in risk, by source of loss (e.g., differentiating between insured and uninsured losses; direct damage to property versus indirect economic losses; etc.)
The report should include illustrative examples of typical results, for the cost-benefit analysis – e.g., showing typical return-on-investment results (i.e., $1 invested in risk reduction is expected to result in $x of savings in losses avoided). It would be useful for these illustrative examples to consider several different perils, different risk mitigation initiatives / investments, and different types / sources of loss. It would also be helpful for the report to include a discussion on factors that would influence the results of the cost-benefit analysis.

Proposal Requirements

To facilitate the evaluation of proposals, the following information should be submitted:

Resumes of the researcher(s), including any graduate student(s) expected to participate, indicating how their background, education, and experience bear on their qualifications to undertake the research. If more than one researcher is involved, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as to the firm or institution on whose behalf the proposal is submitted.
An outline of the approach to be used (e.g., literature search, model, etc.), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and possible limitations of the analysis.
A description of the expected deliverables and any supporting data, tools, or other resources.
Cost estimates for the research, including computer time, salaries, report preparation, material costs, etc. Such estimates can be in the form of hourly rates, but in such cases, time estimates should also be included. Any guarantees as to total cost should be given and will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.
Please note that as a policy, the SOA Research Institute generally does not provide funding to cover academic institution overhead expenses.
As a guide for developing the project budget, please review the Historical Project Cost Guide (see Appendix)
A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions. The SOA Catastrophe and Climate Strategic Research Program is interested in completing this project in a timely manner. Suggestions in the proposal for ensuring timely delivery, such as fee adjustments, are encouraged.
Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.

Selection Process

The SOA Catastrophe and Climate Strategic Research Program will appoint a Project Oversight Group (POG) to oversee the project. The SOA Catastrophe and Climate Strategic Research Program is responsible for recommending the proposal to be funded. Input from other knowledgeable individuals also may be sought, but the SOA Catastrophe and Climate Strategic Research Program will make the final recommendation, subject to Society of Actuaries Research Institute (SOA) leadership approval. An SOA staff research actuary will provide staff actuarial support.

Questions

Any questions regarding this RFP should be directed to Research-CC@soa.org.

Notification of Intent to Submit Proposal

If you intend to submit a proposal, please email written notification by April 7, 2025, to Research-CC@soa.org.

Submission of Proposal

Please email your proposal to Research-CC@soa.org no later than April 18, 2025. It is anticipated that all proposers will be informed of the status of their proposal by the end of May 2025.

Conditions

The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Society of Actuaries Research Institute and the researcher.

The Society of Actuaries Research Institute reserves the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The Society of Actuaries Research Institute also reserves the right to redirect the project as is deemed advisable.

The Society of Actuaries Research Institute plans to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).

The Society of Actuaries Research Institute may choose to seek public exposure or media attention for the research. By submitting a proposal, you agree to cooperate with the [Society of Actuaries/sponsoring entity] in publicizing or promoting the research and responding to media requests.

The Society of Actuaries may also choose to market and promote the research to members, candidates and other interested parties. You agree to perform promotional communication requested by the Society of Actuaries Research Institute, which may include, but is not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.

Conflict of Interest

You agree to disclose any of your material business, financial and organizational interests and affiliations which are or may be construed to be reasonably related to the interest, activities, and programs of the Society of Actuaries Research Institute.

Appendix

The cost ranges below are intended as a guide for budgeting project costs for proposals in response to SOA Research Institute Request for Proposals (RFP). Please note these figures span the 33rd to 66th percentiles for all projects as well as projects that involve a specific approach (lit review, survey, etc.). They are based on historical costs over several recent years. Expected costs for some RFPs may fall outside these ranges depending on the nature of the work and resources required for completion.

All Contracted Projects

This category includes all contracted projects that the Institute has undertaken within the last several years.

The 33^rd-66^th percentile project costs range is $25,000 - $50,000.

Literature Reviews

This category includes projects that involved only a literature review or the cost for the portion of a larger project that included a literature review.

The 33^rd-66^th percentile project costs range is $15,000 - $20,000.

Surveys

This category includes all projects that had a survey as their primary component.

The 33^rd-66^th percentile project costs range is $28,000 - $55,000.