WEBVTT - Climate Insurance and Chasing Ducks Across the Street 0:00:00.120 --> 0:00:02.759 Hey, Dna, Hey Mark. Here we are middle of summer, 0:00:03.000 --> 0:00:05.880 but it seems BENF didn't really get the memo. It 0:00:05.880 --> 0:00:09.879 hasn't really slowed down that much around here, not at all. Actually, 0:00:10.039 --> 0:00:12.600 this week, on the second of August, B and F 0:00:12.760 --> 0:00:15.480 is having our new Delhi Summit. It is one of 0:00:15.720 --> 0:00:20.200 six market gatherings for business and government leaders. We bring 0:00:20.239 --> 0:00:23.280 together people to discuss innovation and the transition to a 0:00:23.320 --> 0:00:26.160 low carbon economy. If you're not lucky enough to attend 0:00:26.160 --> 0:00:29.120 in person, benef clients or BENOF users can still follow 0:00:29.120 --> 0:00:30.920 the action on the BENF mobile app. Just tap on 0:00:30.960 --> 0:00:33.000 the summit. Tap there you can see a full agenda 0:00:33.000 --> 0:00:36.320 with speaker bios and the presentation slides from the BENF talks. 0:00:36.400 --> 0:00:38.680 Those are talks from our BENF analysts. You can also 0:00:38.680 --> 0:00:40.800 see a full list of the attendees. Today, we are 0:00:40.800 --> 0:00:43.440 going to talk with the MC of the Delhi Summit, 0:00:43.520 --> 0:00:46.559 Nathaniel or not Bullard. He is the global head of 0:00:46.560 --> 0:00:49.199 Executive Insights for B and E F. And what does 0:00:49.240 --> 0:00:52.120 that title mean. Well, he wears many hats for us 0:00:52.120 --> 0:00:54.840 over here, and we'll hear all about that in the interview. 0:00:55.200 --> 0:00:57.920 One of those is writing a weekly op ed called 0:00:58.000 --> 0:01:01.000 spark Lines. It is published through Bomberg Opinion and you 0:01:01.000 --> 0:01:03.280 can find it on the terminal under Ni Bullard b 0:01:03.520 --> 0:01:06.480 U L L A R D or on Bloomberg dot 0:01:06.520 --> 0:01:10.720 com under spark Lines, or search for Bullard. In either location. 0:01:10.800 --> 0:01:13.840 You can sign up for a weekly distribution, which I 0:01:13.959 --> 0:01:16.640 must say I am a happy receiver of because his 0:01:16.920 --> 0:01:20.800 pieces are short and pithy and all around interesting. Today 0:01:20.840 --> 0:01:22.839 we're going to talk to him about two spark lines, 0:01:22.880 --> 0:01:25.720 among other things. And just as a quick reminder, B 0:01:25.800 --> 0:01:28.319 and the F does not provide investment or strategy advice. 0:01:28.440 --> 0:01:30.080 You can hear a full disclaimer at the end of 0:01:30.080 --> 0:01:34.520 the show. And right now let's jump in. Hi Na, 0:01:34.640 --> 0:01:36.960 thank you for joining us today. Hi Danna, him Mark, 0:01:36.959 --> 0:01:40.679 How are you guys doing well? So not Bullard, how 0:01:40.720 --> 0:01:45.560 would you describe your role within So? My role is 0:01:46.240 --> 0:01:49.480 a veteran analyst, and I say that very seriously, and 0:01:49.480 --> 0:01:51.840 that I've been doing this now for twelve years, since 0:01:51.880 --> 0:01:54.400 before we were required in a number of different sectors 0:01:54.400 --> 0:01:57.320 and a number of different markets. There are probably not 0:01:57.440 --> 0:01:59.680 that many people that have had that kind of great 0:01:59.720 --> 0:02:02.240 rotation through a lot of the things we do, and 0:02:02.320 --> 0:02:05.920 also are not currently running a big team. So years 0:02:05.920 --> 0:02:07.960 ago in television, we used to have a colleague who 0:02:08.040 --> 0:02:10.679 is described as an editor at large. This is a 0:02:10.720 --> 0:02:13.160 sort of an equivalent analyst at large position, and what 0:02:13.280 --> 0:02:19.640 that actually entails is about even thirds split between doing 0:02:19.680 --> 0:02:22.239 things with our own management committee, like with the two 0:02:22.240 --> 0:02:24.160 of you and with John morre CEO and with our 0:02:24.200 --> 0:02:28.720 other colleagues. Another third is doing public presentations, so the 0:02:28.800 --> 0:02:31.240 sort of classic I talk and travel kind of work 0:02:31.400 --> 0:02:34.120 that a lot of our analysts already do, but with 0:02:34.200 --> 0:02:37.679 a with a particular angle on it. Generally speaking, it's 0:02:37.680 --> 0:02:40.680 either very broadcast so it's something for like three four, 0:02:40.880 --> 0:02:44.359 five hundred or a thousand people, or very narrow cast 0:02:44.520 --> 0:02:47.639 to let's say a corporate board a lot of times 0:02:47.880 --> 0:02:51.280 asking about similar ideas but with a very different set 0:02:51.320 --> 0:02:54.679 of vectors for delivery. And then finally, I write every 0:02:54.720 --> 0:02:56.600 week I have a project that I started five years 0:02:56.600 --> 0:03:00.520 ago as an email essentially for friends and Emily of 0:03:01.200 --> 0:03:03.600 be in the f of the time, that was just 0:03:03.720 --> 0:03:06.639 published by us through our marketing capabilities and now is 0:03:06.639 --> 0:03:11.680 published by Bloomberg Opinion, which publishes well Opinion by Bloomberg authors. 0:03:12.240 --> 0:03:15.000 And it goes out as an email, which is how 0:03:15.000 --> 0:03:17.000 it originated, it goes out on the web, and it 0:03:17.040 --> 0:03:20.560 goes out on the Bloomberg terminal, usually on Friday's maybe 0:03:20.639 --> 0:03:23.400 sometimes with some flexibility depending on the timing of what 0:03:23.400 --> 0:03:26.919 I'm writing about. So you sent us a couple uh 0:03:27.120 --> 0:03:29.560 different pieces today to say, hey, guys, study up a 0:03:29.600 --> 0:03:32.200 little bit before we have a chat um. We can 0:03:32.240 --> 0:03:34.200 dive into those, but I think one that we were 0:03:34.240 --> 0:03:36.520 talking about that was pretty well received, just one called 0:03:36.800 --> 0:03:39.800 climate change is all most of us have ever known. 0:03:40.000 --> 0:03:42.480 That's right, So tell us a little bit about what 0:03:42.520 --> 0:03:45.320 you wrote there and what it means and really the 0:03:45.320 --> 0:03:47.560 message that you were trying to send with that. Certainly. 0:03:47.560 --> 0:03:50.920 So there's another contributor to Bloomberg in Singapore who was 0:03:51.160 --> 0:03:54.240 a former trader. His name is Mark Cutmore, and he 0:03:54.320 --> 0:03:56.680 did the ODDNS podcast a couple of years ago that 0:03:57.080 --> 0:03:59.600 Joe Wisenhal and Tracy All the Way Run, and he 0:03:59.720 --> 0:04:01.760 said something that is stuck with me and is a 0:04:01.800 --> 0:04:03.600 sort of guiding principle for a lot of this work, 0:04:03.640 --> 0:04:06.800 which is markets think in narratives. So we're often looking 0:04:06.800 --> 0:04:09.240 at things from either an intensely analytical or a very 0:04:09.280 --> 0:04:12.680 factual basis, but at the broadest sense of markets with 0:04:12.680 --> 0:04:15.400 the capital m They think in narratives and in stories. 0:04:15.880 --> 0:04:17.720 And one of the challenges that I find in dealing 0:04:17.800 --> 0:04:21.520 with a discussion about climate change in particular is that 0:04:21.760 --> 0:04:24.960 it is quite experiential for a lot of people. And 0:04:25.000 --> 0:04:27.240 I mean experience in a couple of ways. One how 0:04:27.240 --> 0:04:29.280 old you are, like, what you what you knew as 0:04:29.320 --> 0:04:33.039 a child, what informs your expectation based on what you 0:04:33.080 --> 0:04:37.279 knew when you were young? And also your experience within 0:04:37.600 --> 0:04:41.640 the corporate world. Are you nearer to retirement than you 0:04:41.680 --> 0:04:45.279 are to initiating your job, let's say, And in fact, 0:04:45.320 --> 0:04:47.000 if you are the kind of senior people that I'm 0:04:47.000 --> 0:04:50.479 engaging with most of the time, that's almost axiomatic. They're 0:04:50.480 --> 0:04:52.960 almost all that way. Very rare is it that you 0:04:53.040 --> 0:04:55.200 go to, say, a board of directors and somebody's like, yeah, 0:04:55.200 --> 0:04:58.280 I'm twenty four, and more likely they're double that or 0:04:58.320 --> 0:05:01.200 even triple that age, right, And so their their job 0:05:01.320 --> 0:05:04.040 is to sort of traffic in and build off of 0:05:04.240 --> 0:05:06.960 their years and decades of experience. But I think that 0:05:06.960 --> 0:05:09.000 has a way of conquering the ability to look at 0:05:09.080 --> 0:05:12.800 sort of forward narratives. And so my frame for this 0:05:12.880 --> 0:05:15.359 and thinking about climate change was a couple of the 0:05:15.360 --> 0:05:18.040 publications that had come out in from third parties, one 0:05:18.040 --> 0:05:21.799 of them was a precipitation chart in the United States. 0:05:21.800 --> 0:05:25.600 This is from Noah So, one of our research institutes 0:05:25.640 --> 0:05:28.800 in the US that it published that the trailing twelve 0:05:28.800 --> 0:05:32.400 months was the wettest twelve months in the United States 0:05:32.400 --> 0:05:36.480 since and probably forever. There's really no way of knowing before, 0:05:38.240 --> 0:05:41.320 and extremely wet, like much wetter than it's ever been. Now, 0:05:41.440 --> 0:05:43.240 that's a very noisy kind of signal, but if you 0:05:43.279 --> 0:05:45.960 smooth it out, you can see that it's like about 0:05:45.960 --> 0:05:48.640 ten percent wetter than the long term average has ever been. 0:05:49.400 --> 0:05:51.839 Um I also realized that if you if you fit 0:05:51.920 --> 0:05:55.200 these things against the average across the twentieth century, that 0:05:55.320 --> 0:05:59.240 it's been above average for about forty something years, right, 0:05:59.240 --> 0:06:02.120 so we loss the average on the way up, and 0:06:02.320 --> 0:06:06.919 we're still there and actually mean surface temperatures a global 0:06:07.080 --> 0:06:09.920 surface temperatures around the world have fallen on almost exactly 0:06:10.000 --> 0:06:12.920 the same kind of a pattern. There's a thirty year 0:06:12.960 --> 0:06:16.880 interval in which averages are determined and the average temperatures 0:06:17.000 --> 0:06:21.479 the benchmark is nineteen fifty one to night and in 0:06:21.640 --> 0:06:25.120 the mid nineteen seventies, the global surface temperature went above 0:06:25.160 --> 0:06:27.599 that mean and has never been below it. And so 0:06:27.680 --> 0:06:29.920 the reason that I thought that was useful was because 0:06:30.080 --> 0:06:33.200 we might be dealing with a business executive who's at 0:06:33.240 --> 0:06:35.760 the tail end of a long and illustrious career in 0:06:35.960 --> 0:06:40.000 his or her domain, and is mostly embedded in their 0:06:40.040 --> 0:06:43.560 own business. It may not necessarily be thinking on a 0:06:43.600 --> 0:06:47.359 thirty forty year time went ahead, but that interval of 0:06:47.600 --> 0:06:50.960 climate change and that interval of precipitation matches up very 0:06:51.000 --> 0:06:54.400 nicely with the global median age, which is about thirty 0:06:54.480 --> 0:06:57.880 seven which means that actually the median person on Earth 0:06:57.920 --> 0:07:02.159 has only known something that was hotter and wetter than 0:07:02.400 --> 0:07:05.919 it was before. And if you look at places that 0:07:05.920 --> 0:07:08.040 are not you know, the global average, and that's saying 0:07:08.120 --> 0:07:10.920 least developed countries. By the UN standard, the median age 0:07:10.960 --> 0:07:15.120 is nineteen point four years. So most people have had 0:07:15.640 --> 0:07:19.960 the entirety of their lifetimes within a system that is 0:07:20.360 --> 0:07:24.679 not variable and not fluctuating, or rather not just variable 0:07:24.680 --> 0:07:28.160 and fluctuating, but has a vector. And so if you're 0:07:29.120 --> 0:07:33.240 twenty and entering the workforce, your expectations are probably about 0:07:33.280 --> 0:07:36.720 always going to be more automation. It's also if you're 0:07:36.760 --> 0:07:39.000 looking at your macro environment. It's always going to be 0:07:39.040 --> 0:07:42.280 hotter and it feels like it, right, And this is 0:07:42.320 --> 0:07:45.280 a narrative, is something that helps to shape and drive 0:07:46.080 --> 0:07:48.640 the way that people construct their long term vision of 0:07:48.640 --> 0:07:51.720 the future. Companies do this in the form of scenario planning. 0:07:52.720 --> 0:07:55.240 I try to do it in six or seven hundred 0:07:55.280 --> 0:07:58.240 words in an email that people received with a few charts, 0:07:58.840 --> 0:08:00.600 but I think it's part of the same kind of idea. 0:08:00.640 --> 0:08:02.960 And I realized that the only the only way to 0:08:03.040 --> 0:08:05.560 sort of convince people about that that they are carrying 0:08:05.600 --> 0:08:08.680 their own stories with them is to tell another story. 0:08:09.040 --> 0:08:11.480 And it's a useful framework. I think we guess, for 0:08:11.520 --> 0:08:14.800 one thing, the numbers around it are inarguable. I mean, 0:08:14.840 --> 0:08:17.760 you can you can argue about mean surface temperature, but 0:08:17.800 --> 0:08:20.120 you're not really arguing with me, would be any of 0:08:20.160 --> 0:08:24.400 analysts you're arguing with, you know, laboratories and research institutes. 0:08:24.960 --> 0:08:27.480 So you mentioned the piece that sentiment is changing around 0:08:27.520 --> 0:08:30.320 these things. Can you describe kind of how some of 0:08:30.320 --> 0:08:34.560 the sentiments are changing. So very fewer and fewer people 0:08:34.880 --> 0:08:39.199 who do not believe in climate change, particularly people that 0:08:39.240 --> 0:08:42.640 are younger. More and more people believe that not only 0:08:42.679 --> 0:08:45.120 is it occurring, but it is anthropogenic, so it's caused 0:08:45.160 --> 0:08:48.040 by people, and there there is a reason to sort 0:08:48.040 --> 0:08:51.439 of disaggregate those those two beliefs, right well, giving that 0:08:51.520 --> 0:08:54.000 it happens means well, you know, we go through these 0:08:54.000 --> 0:08:57.200 periods once every million years or whatever, so what and 0:08:57.200 --> 0:09:01.120 and in truth that does happen globally or in the 0:09:01.120 --> 0:09:04.679 long geneologic timeline. It usually coincides with what we call 0:09:04.760 --> 0:09:09.320 greatest extinctions, but it does occur on its own. Pleasant pleasant, 0:09:09.360 --> 0:09:11.839 isn't it. But the next aspect, though, is that it's 0:09:11.880 --> 0:09:13.719 being caused by people, meaning that there is something to 0:09:13.800 --> 0:09:17.559 be There's both blame, but I would say more importantly, 0:09:17.559 --> 0:09:20.480 there's something to be done as opposed to nothing to 0:09:20.480 --> 0:09:23.280 be done. And I think that that's that's the sort 0:09:23.320 --> 0:09:25.600 of thing that we start to see show up in 0:09:25.600 --> 0:09:28.640 a business context, partly as imperative, you know, we have 0:09:28.760 --> 0:09:31.680 to do this, but depending on the company, partly as 0:09:31.720 --> 0:09:34.800 opportunity as well, Like if doing doing this, it might 0:09:34.840 --> 0:09:38.400 be a way to first of all, cap your downsides 0:09:38.440 --> 0:09:40.280 as much as possible, Right so the sort of sort 0:09:40.280 --> 0:09:43.680 of resilience dividend or robustness, and the other part is 0:09:43.720 --> 0:09:47.120 to capture some upside from it. We're we're better prepared 0:09:47.120 --> 0:09:50.480 and are therefore in a better position to provide for 0:09:51.240 --> 0:09:54.920 be meaningful in a future that is whether or more volatile. 0:09:54.960 --> 0:09:59.360 More everything you're writing specifically for business audience. You are, 0:09:59.480 --> 0:10:01.960 you are on the Bloomberg terminal and also have a 0:10:02.040 --> 0:10:04.600 newsletter to the wider world, but there there is a 0:10:04.600 --> 0:10:07.720 specific audience here. There are two other pieces that you wrote, 0:10:08.200 --> 0:10:11.240 the one called climate Change puts Insurers to the test 0:10:11.400 --> 0:10:14.920 and the other how far will Insurers go to detach 0:10:15.040 --> 0:10:18.640 from coal? Now, I'm really glad you brought up scenarios. 0:10:18.679 --> 0:10:21.400 Scenario planning is something that is kind of at the 0:10:21.520 --> 0:10:26.360 core of the TCFD Task Force for Climate related Financial disclosures. Additionally, 0:10:26.720 --> 0:10:28.760 it seems to be getting to be at the core 0:10:29.080 --> 0:10:33.840 for a lot of businesses, both corporates and finance UM 0:10:33.880 --> 0:10:36.600 and not just relegated to this insurance space. Whether they're 0:10:36.600 --> 0:10:39.280 constantly trying to come up with probabilities, but these probabilities 0:10:39.320 --> 0:10:42.880 of likelihood around these climate change scenarios seem to be 0:10:42.920 --> 0:10:45.440 going more mainstream. Do you see any evidence of that 0:10:45.520 --> 0:10:48.960 coming about UM or maybe that's illustrated in these two pieces. 0:10:49.080 --> 0:10:51.959 There's an interesting thing always about watching insurance because it's 0:10:52.040 --> 0:10:54.600 it's like a market of other markets, almost right, and 0:10:54.679 --> 0:10:58.160 it in turn has its own risk market called reinsurance. 0:10:58.640 --> 0:11:00.319 But the reason I think that it's very warden to 0:11:00.360 --> 0:11:04.120 watch is because it is both obviously the the arbiter 0:11:04.280 --> 0:11:06.840 and the underwriter of risk, but also it is a 0:11:06.880 --> 0:11:11.240 major investor in assets of all kinds of classes. So 0:11:11.280 --> 0:11:15.920 it has this this unusual exposure to basically anything. So 0:11:16.040 --> 0:11:18.400 let's say that you are you are a you're an 0:11:18.400 --> 0:11:21.680 orige insure and you underwrite the risks around a coal 0:11:22.080 --> 0:11:25.480 coal plant, qual fired power plant. You are exposed to 0:11:25.520 --> 0:11:28.400 anything that you have underwritten on the asset itself, but 0:11:28.480 --> 0:11:31.520 you also might have you might own equity in the 0:11:31.600 --> 0:11:34.160 company that in turn neither provides fuel to that or 0:11:34.240 --> 0:11:36.400 owns the company that owns the coal plant, or something 0:11:36.440 --> 0:11:39.240 like that, and so you're exposed to whatever business dynamics 0:11:39.280 --> 0:11:41.680 happen as well, both the physical risks and the financial 0:11:41.760 --> 0:11:43.720 risk that are associated with one of these assets. So 0:11:44.240 --> 0:11:48.000 insurance is a sort of a uniquely multifaceted way of 0:11:48.040 --> 0:11:51.520 looking at any kind of macro risk. That's generally why 0:11:51.559 --> 0:11:55.000 they're fairly risk averse. Um they're also really highly regulated, 0:11:55.040 --> 0:11:57.520 and that's the key part that I looked at in 0:11:57.840 --> 0:12:01.240 my piece, which was that the Bank of England's Prudential 0:12:01.280 --> 0:12:06.760 Regulation Authority, the regulator for in fiduciary institutions, puts out 0:12:06.760 --> 0:12:09.760 a stress test that it sends to all general insurers 0:12:09.800 --> 0:12:11.199 and I think they do them for banks as well, 0:12:11.880 --> 0:12:13.880 and a lot of it is usual stuff, tell us 0:12:13.920 --> 0:12:16.640 your capital ratios, tell us whatever, whatever kind of things, 0:12:17.280 --> 0:12:19.360 and then they like to and this is a good thing, 0:12:19.400 --> 0:12:21.400 sort of throw something else new in there each time, 0:12:21.679 --> 0:12:25.120 and they're they're sort of less official than the kind 0:12:25.160 --> 0:12:26.839 of standard stuff that always happens. But in the most 0:12:26.880 --> 0:12:29.720 recent one a few months ago, the Bank of England 0:12:29.800 --> 0:12:34.320 p r A says, tell us about your exposure to 0:12:34.400 --> 0:12:38.720 cyber security and to climate risk, and they do it 0:12:38.760 --> 0:12:44.360 by having you lot a spreadsheet that says I have 0:12:44.600 --> 0:12:47.400 X many assets and these these asset classes and in 0:12:47.440 --> 0:12:49.679 these scenarios, I'm going to write their book value down 0:12:49.760 --> 0:12:52.240 by this. So it's it's very it's very blunt. I mean, 0:12:52.280 --> 0:12:54.199 if I can figure it out, it can't be that complicated, 0:12:54.240 --> 0:12:58.120 So it's it's fairly simple. Uh, it's coming from a 0:12:58.240 --> 0:13:01.600 very serious regulatory institutions. You more or less have to 0:13:01.640 --> 0:13:03.400 do it. I don't think you running to punt on it. 0:13:04.200 --> 0:13:07.560 And it's it's got some very clear directives around it. 0:13:07.600 --> 0:13:09.320 So I looked at that as a way of saying, Okay, well, 0:13:09.360 --> 0:13:11.319 this is like what the regulator of the people who 0:13:11.400 --> 0:13:16.120 underwrite an assess risk thinks. The risks might be very 0:13:16.160 --> 0:13:18.360 a very interesting way for us to be to be 0:13:18.400 --> 0:13:22.480 approaching what might be happening and how companies might think 0:13:22.480 --> 0:13:26.559 about it. And it's they're not small numbers in terms 0:13:26.640 --> 0:13:28.880 of what a write down of asset classes would look like. 0:13:28.920 --> 0:13:31.000 I can one of the transition scenarios of climate change. 0:13:31.040 --> 0:13:33.400 They say, you write your cold book off by more 0:13:33.440 --> 0:13:36.679 than which ouch if you're you know, if you're an investor, 0:13:36.720 --> 0:13:38.880 that that's pretty that's pretty severe. And in fact they 0:13:38.880 --> 0:13:41.880 actually call it disorderly like it's not it's not a 0:13:41.920 --> 0:13:44.520 sort of like, well, we can smoothly transition out of this. 0:13:44.640 --> 0:13:47.880 It's more like things have changed so significantly that these 0:13:47.920 --> 0:13:51.840 assets are trending towards worthless, or they're they're so heavily 0:13:51.880 --> 0:13:54.360 impaired that there's something that you you have to get 0:13:54.400 --> 0:13:56.800 out of, no matter what that no matter what's happening. 0:13:57.160 --> 0:13:58.920 So when I think it is actually very useful that 0:13:59.000 --> 0:14:02.320 when looking at the two scenarios the Bank of eng 0:14:02.400 --> 0:14:05.679 And is asking for, is they on the surface of 0:14:05.760 --> 0:14:08.280 nothing in common with each other cybersecurity and climate risk. 0:14:08.320 --> 0:14:09.679 But the more I thought about it, they actually have 0:14:09.840 --> 0:14:13.680 quite a bit in common. They're both pervasive, very large. 0:14:13.920 --> 0:14:16.400 I guess mark what we would call an attack surface 0:14:17.040 --> 0:14:19.640 in which things can happen. Right in cybersecurity, it's everything 0:14:19.680 --> 0:14:24.840 from your connected doorbell or the you know, the connected 0:14:25.160 --> 0:14:27.360 pump in your fish tank can be used as a 0:14:27.440 --> 0:14:31.480 point of entry to somebody's CRM and you now stolen 0:14:31.480 --> 0:14:34.880 everybody's credit card information. So these think this bloomberg business. 0:14:34.920 --> 0:14:37.520 We actually wrote about this and I thought climate is 0:14:37.520 --> 0:14:39.880 actually kind of similar. Is that like, basically everything ends 0:14:39.920 --> 0:14:42.560 up affected by this. It's not just that it's hotter, 0:14:42.720 --> 0:14:45.680 it's also that things are more volatile. Most of our 0:14:45.760 --> 0:14:49.320 built environment was designed around some sort of standard that 0:14:49.360 --> 0:14:51.440 if it's no longer the standard, things just don't work 0:14:51.480 --> 0:14:56.200 as well. It creates brittleness throughout the system. Uh paradox, 0:14:56.200 --> 0:14:58.240 And it was actually easier to measure what might be 0:14:58.520 --> 0:15:01.480 problematic from climate change that was from cybersecurity, even though 0:15:01.520 --> 0:15:03.880 it's a really long term thing. But I like that. 0:15:03.960 --> 0:15:06.560 I think that that that construct that the Bank of 0:15:06.600 --> 0:15:09.960 England has helpfully put together is one that I would 0:15:10.000 --> 0:15:14.240 imagine comes into the scenario planning and the scenario thinking 0:15:14.440 --> 0:15:16.600 of a lot of the institutions that we deal with. 0:15:16.720 --> 0:15:19.160 Is it like, well, if you went to a company 0:15:19.240 --> 0:15:22.960 you said do you have a cybersecurity strategy and they 0:15:22.960 --> 0:15:26.720 said nah, we'd be a bit surprised. I would imagine 0:15:26.720 --> 0:15:29.680 that for pretty much any big institution we would have 0:15:29.680 --> 0:15:31.600 the same reaction if in five years time they said 0:15:31.680 --> 0:15:35.520 I don't have a climate change scenario policy or risk 0:15:35.520 --> 0:15:37.840 assessment or way of thinking about it. So do you 0:15:37.840 --> 0:15:40.200 think these things are things that happened in as curve, 0:15:40.240 --> 0:15:42.200 that just happened all of a sudden Very much so. 0:15:42.400 --> 0:15:44.120 I mean, if you if you look at them, if 0:15:44.120 --> 0:15:46.680 you look at these things again, thinking in stories, very 0:15:46.760 --> 0:15:49.080 few institutions want to be the first to do something, 0:15:50.120 --> 0:15:52.840 even fewer, very few institutions want to be the last 0:15:53.000 --> 0:15:56.280 to do something. So, particularly when you're talking about risk, 0:15:56.320 --> 0:15:59.440 when you're talking about standards and things like that, they 0:15:59.480 --> 0:16:03.400 tend to go slowly and then suddenly and then especially 0:16:03.400 --> 0:16:05.640 once you if you think about it, is a group 0:16:05.640 --> 0:16:08.040 of peers, right, they all want to be doing it. 0:16:08.480 --> 0:16:11.240 Who wants to be who wants to be the last 0:16:11.320 --> 0:16:14.720 insurance company that does not have a policy about thermal 0:16:14.760 --> 0:16:19.120 coal you don't write or you've relegated yourself to essentially 0:16:19.120 --> 0:16:22.040 a very specialty part of the business. Who wants to 0:16:22.080 --> 0:16:25.880 be the auto company that has zero electric vehicle strategy 0:16:26.120 --> 0:16:30.000 would be another analogy. I read Bob Dudley's talk at 0:16:30.080 --> 0:16:31.720 Chatham House a couple of weeks ago and scoring them 0:16:31.720 --> 0:16:35.560 to train in and it really seemed like vp IS 0:16:35.560 --> 0:16:37.440 is on its way right, not maybe not the first, 0:16:37.440 --> 0:16:40.320 but maybe the first oil major to really just go 0:16:40.400 --> 0:16:43.320 up the curve. And but they were the first for 0:16:43.360 --> 0:16:45.240 a while for a while and then backed out. But 0:16:45.960 --> 0:16:48.440 it looks like they're they're backing back in. But but 0:16:48.440 --> 0:16:51.800 so you know, Bob Doney, the CEO of BP and 0:16:52.200 --> 0:16:54.920 his colleague who is his counterpart rather at Shell Bend 0:16:54.960 --> 0:16:57.680 and Britain, they they are both quite vocal about these 0:16:57.720 --> 0:17:00.280 sorts of things. By the time that they've each that 0:17:00.400 --> 0:17:04.760 point of public discussion, it's probably relatively well considered within 0:17:04.800 --> 0:17:07.520 the rest of the organization there. Let's put it this, 0:17:07.600 --> 0:17:10.960 or they're probably not winging it it's it's going, it's 0:17:10.960 --> 0:17:14.720 going through a very thoughtful apparatus, especially for institutions that 0:17:14.800 --> 0:17:18.119 really do plan to So I but I, but I 0:17:18.240 --> 0:17:21.040 what I don't know yet and what is probably in 0:17:21.080 --> 0:17:24.400 a neutral statement unclear for quite some time as exactly 0:17:24.400 --> 0:17:26.679 what that means, you know, is for a company, is 0:17:26.680 --> 0:17:29.520 it primarily rated towards risk? Is is it primarily rated 0:17:29.560 --> 0:17:32.920 towards opportunity? If you think about it from a strategic 0:17:32.960 --> 0:17:35.760 planning perspective, do you think that there's an average time 0:17:35.840 --> 0:17:39.320 from announcement of change in a company to actual implementation. 0:17:39.520 --> 0:17:41.920 It's a fantastic question that I think depends much more 0:17:42.000 --> 0:17:44.600 upon the nature of the business and its own cultures, 0:17:44.720 --> 0:17:50.320 embrace of speed, openness to change, and where where it 0:17:50.359 --> 0:17:52.919 probably is along its own journey with its own from 0:17:52.960 --> 0:17:56.199 lack of a better word, stuff. So, companies that have 0:17:56.400 --> 0:17:59.760 lots of resources of various types, and I would put 0:17:59.760 --> 0:18:02.479 in this in this context, could say a diversified metals 0:18:02.480 --> 0:18:07.560 and mining company has upside scenarios and not upside scenarios 0:18:07.600 --> 0:18:12.200 within its portfolio of assets. In an electric vehicle high 0:18:12.240 --> 0:18:16.200 electric vehicle penetration future, in a very climate change the 0:18:16.280 --> 0:18:18.920 future and whatever there there's there's there's pluses and minuses. 0:18:19.240 --> 0:18:22.280 A lot of times those organizations tend to move sometimes 0:18:22.280 --> 0:18:25.480 actually more supp only because they can. It's Pewer play. 0:18:25.560 --> 0:18:29.680 Companies that have essentially no upside from a transition away 0:18:29.680 --> 0:18:32.800 from one resource towards another. That and I say this 0:18:33.240 --> 0:18:38.000 neutral e are fairly naturally less enthusiastic about such things. 0:18:37.840 --> 0:18:40.760 It's the more active fight rather than adapt. I think 0:18:40.760 --> 0:18:42.200 that's I think that's a way to say it, because 0:18:42.240 --> 0:18:46.840 adapt adaptation is it's not necessarily not in the d 0:18:46.960 --> 0:18:49.560 n A. It's more like not in the capability of 0:18:49.760 --> 0:18:52.399 the resources that are given. It would require doing something 0:18:52.400 --> 0:18:57.119 completely different, especially for institutions for which you know, a 0:18:57.160 --> 0:18:59.000 lot of the value and the way in which they 0:18:59.000 --> 0:19:01.560 are valued is in assets that they own, you know, 0:19:02.000 --> 0:19:06.000 years of future reserves and things like that. Those those 0:19:06.000 --> 0:19:10.919 are not a particularly resilient resource when it comes to 0:19:11.880 --> 0:19:13.639 when it comes to a future that might not be 0:19:13.800 --> 0:19:16.359 using so much. You had another piece, Actually they said, 0:19:16.359 --> 0:19:19.800 like they're those numbers becoming increasingly meaningless. Isn't that right? 0:19:20.359 --> 0:19:23.080 Was that not you? That was Liam Denning? Sorry, I wish, 0:19:23.119 --> 0:19:26.000 I wish I wrote something that good. Yeah, it was. 0:19:26.359 --> 0:19:28.959 It was great, so good in fact that it couldn't 0:19:28.960 --> 0:19:32.480 have been written by That's definitely on the Mdenning piece. 0:19:34.600 --> 0:19:38.280 When you're looking at the change curve, people do resist change, 0:19:38.359 --> 0:19:42.400 whether that be groups of people in a company or individuals. 0:19:43.359 --> 0:19:46.240 And I'm actually thinking, as you're talking about these company 0:19:46.320 --> 0:19:51.560 dynamics and change and opportunity and how you sipeon through that, 0:19:51.920 --> 0:19:54.280 on this very micro level, individuals are doing that. So 0:19:54.359 --> 0:19:56.360 I am actually going to pivot us to two other notes. 0:19:57.280 --> 0:20:00.320 So one is self driving fixed for a population problem, 0:20:00.359 --> 0:20:02.919 and the other is Hong Kong's taxi fleet pages in 0:20:03.040 --> 0:20:06.399 real time. Uh. Now, by Hong Kong's taxi fleet, you're 0:20:06.400 --> 0:20:09.399 talking about people. And I must say that we spend 0:20:09.400 --> 0:20:12.280 a lot of time talking about AI and self driving 0:20:12.320 --> 0:20:14.119 and whether or not this is going to replace physical 0:20:14.160 --> 0:20:16.960 drivers and then Uber indeedy and who those physical drivers 0:20:17.000 --> 0:20:21.200 are and those physical drivers, Yeah, they're They're real people 0:20:21.280 --> 0:20:25.119 who have adapted in many regards, or maybe in Hong 0:20:25.200 --> 0:20:30.720 Kong's case, not adapted to this rapid implementation of change 0:20:31.119 --> 0:20:34.399 in how we move people and things around and in 0:20:34.560 --> 0:20:39.199 what and how it all comes together. So as this 0:20:39.280 --> 0:20:42.400 change is happening to people around the world in real time, 0:20:42.640 --> 0:20:44.800 talk a little bit about those notes, because I think 0:20:44.800 --> 0:20:46.440 one of the fun things that you get to do 0:20:46.560 --> 0:20:50.000 is not just talk about implications for companies and opportunities, 0:20:50.080 --> 0:20:53.439 but actually how it's going to affect everyone's lives. Thank you, 0:20:53.480 --> 0:20:54.960 I I yeah, I had a lot of fun with 0:20:55.000 --> 0:20:57.040 that one. I didn't give in Hong Kong for four years, 0:20:57.040 --> 0:20:59.000 so it's close to heart. And actually marketing into this 0:20:59.080 --> 0:21:00.480 a bit light on how to you come up with 0:21:00.480 --> 0:21:04.320 an idea for something. A lot of them are actually experiential, 0:21:04.440 --> 0:21:06.920