An AI model for underwriting commercial property insurance is found to have been developed using 10 years of historical data. The risk team notes that climate-related loss events have increased significantly in the last three years, accounting for 40% of recent losses. Which risk management action is MOST appropriate?

B is correct because the rapid increase in climate-related losses means historical data (which is 70% non-climate-period data) may significantly underestimate current and future risk. The model should be assessed for climate risk representation and updated or supplemented to reflect the changed environment. Accepting the model (A) ignores the material distributional shift. Replacing with a 3-year-only model (C) abandons valuable historical context and may overfit to a limited recent period. Excluding climate perils entirely (D) creates an incomplete pricing model that systematically underprices climate-exposed properties.