Wharton is pleased to welcome 13 new faculty members this year. Parinitha (Pari) Sastry brings expertise in climate change, housing, and insurance markets.
Parinitha Sastry is an assistant professor of finance with a secondary appointment in the Wharton Real Estate Department. She grew up in the New York-New Jersey area and earned her doctorate from MIT. She spent two years as an assistant professor of finance at Columbia Business School before coming to Wharton.
Sastry studies the effect of climate change on financial markets, trying to understand how banks and insurance companies manage and price these risks. Those decisions affect the broader economy, including where people choose to live and how they invest. She said her research focus was motivated by Hurricane Harvey, a category 4 storm that made landfall in Texas and caused more than $1.25 billion in damage. Sastry was working on her PhD when Harvey hit in 2017.
“It kind of came as a surprise and was one of the first times that people started to feel like physical risks from climate change were intensifying faster than expected,” she said. “It was just so big, so important, so understudied, and I felt like there were so many questions I wanted to understand about that event.”
Sastry is currently studying the regulation of homeowners insurance companies. One of her recent papers revealed that a ratings agency was giving inflated “financial strength” ratings to Florida insurance companies, with many of them going insolvent after large hurricanes. Her paper was cited by the U.S. Senate.
“This research was pretty consequential because it meant that Fannie Mae and Freddie Mac, which are owned by the taxpayer, were potentially not screening insurance companies the way they should be,” Sastry said.
Sastry will teach a course called “Climate Risks and Opportunities,” with one section for undergrads and another for MBA students. The class will cover how businesses manage climate-related risks and how their investments influence climate change.
By Angie Basiouny for Knowledge at Wharton
Image credit for Sastry’s headshot: Bryce Vickmark