Growth in climate risk tools

Physical climate risk data: the more we learn, the less we know? Khalid Azizuddin's recent piece in *Responsible Investor captures well what many practitioners are grappling with today: - asset-level data that remain incomplete or hard to interpret; - physical hazard exposure often disconnected from financial materiality; - little visibility on supply chains or customers; - adaptation and resilience efforts largely ignored; - and a risk of over-simplifying complex realities into a single “score.” Some three years ago, EDHEC Business School set out to address exactly these challenges, working to advance climate risk modelling and make decision-useful for investors, companies, and public authorities. In this work, we have developed: 🔹 a blueprint for a new generation of probabilistic climate scenarios; 🔹 high-resolution geospatial modeling capabilities to allow for geographic and sectoral downscaling, consistent with each scenario; 🔹 an open database of decarbonisation and resilience technologies through the #ClimaTech project, which officially launched this week. While the research is public, the new EDHEC Climate Institute has also been assisting a school-backed venture, Scientific Climate Ratings (SCR), which integrates this research to deliver forward-looking quantification of the #financialmateriality of climate risks for infrastructure companies and investors worldwide. While SCR provides a rating scale for comparability, it avoids the trap of over-simplification. Each rating is backed by probabilistic scenario modelling, analysis of physical and transition risk exposures, and explicit accounting for adaptation measures. The result is a synthesis that remains transparent, interpretable, and anchored in scientific rigour. Together, these initiatives aim to move the discussion from data abundance to decision relevance, equipping practitioners with tools that connect climate science, finance, and strategy.

Superb report published today from Green Futures Solutions (University of Exeter) on the inadequacy of current corporate and financial risk models in accommodating climate risks. At its most fundamental, I see the failure of these risk models as the core assumption that our systems of the future - whilst dynamic - will retain the same basic structures, functions and features as they do today. The assumption that our social, economic, and environmental reality will march onward into a flat, linear, tabula rasa which extends infinitely into the future. Tipping points science shows us that this isn't true. With increased temperatures and continued ecosystem degradation, tipping points will be reached, and system collapses will follow. And with system collapses come cascade failures, and often unforeseeable (and catastrophic) consequences. These consequences and radical uncertainties have to be - as far as they can be - factored into a new generation of risk governance approaches, fit for the future that lies before us. In the Ecologi | B Corp™ team, we're spending a lot of time thinking about risk management strategies as a core component of - and motivator for - corporate climate action. On our project assessments, we use sensitive risk models which take into account extreme climate scenarios and the significant uncertainty that comes with them - so that we can bake-in precaution, prevention and resilience from the start. Risk assessment and management has become a huge part of the work we do, both internally and for our clients. It's not lip service to say that climate risk management is business critical. Climate change impacts are arguably the most foundational, most all-encompassing of all risk factors affecting businesses today. And many current risk approaches in use by businesses and investors just aren't up to the task. Read the report 👉 https://lnkd.in/evipkQNX Good write-up in The Guardian 👉 https://lnkd.in/eXPeYjt5 📸 : John Towner via Unsplash

I was wrong about climate adaptation planning. . . You do not have to start it from scratch. Here is a tool worth knowing. CRISP – Climate Risk Planning & Managing Tool for Development Programmes in Agri-food Systems. What makes CRISP powerful is its clear, structured categorisation of climate risk: - Hazards: rainfall, temperature, seasonality, wind, maritime-related - Impacts: biophysical and socioeconomic - Vulnerability: economic, human, institutional capacity, sensitivity to harm Exposure, Risk, and Adaptation options - Adaptation capitals: financial, human, natural, physical, political, and social Why is this useful? CRISP gives organisations a head start in climate risk assessment by breaking risk down into its core components - hazard, exposure, and vulnerability - and then linking these to adaptation options. This makes it especially valuable as a beginner or entry-level tool for teams starting work on climate adaptation in agri-food systems. The climate risk information in CRISP is presented using climate risk impact chains, helping users understand how hazards translate into real-world impacts. Importantly, adaptation options are embedded to highlight entry points for climate risk management aimed at reducing vulnerability. While the tool does require contextualisation to local conditions, it offers a strong foundation for informed decision-making and structured discussions on climate risk. If you’re working in climate action, agriculture, food systems, or development programmes, CRISP is definitely worth exploring. It is available for all agro-ecological contexts. Here is the link for the tool: https://crisp.eurac.edu/ Share widely with your fellow organisations working on climate adaptation in food systems. #climateadaptation #foodsystems #agriculture #farmsystems

#ClimateAdaptation is moving from side project to balance-sheet priority. McKinsey estimates climate-resilience technologies could represent $600B–$1T in addressable markets by 2030, across building hardening, grid resilience, water systems, wildfire and flood mitigation, supply-chain protection, and risk transfer. We’re already seeing the demand signal that feeds those markets:  premium hikes and FAIR-plan growth push owners toward risk transfer and upgrades; outage spikes drive backup power and grid/storage spend; and code-plus retrofits (impact-rated roofs, debris-resistant openings, WUI) funnel capital into building hardening—the very categories McKinsey sizes. Climate isn’t one more risk... it’s a risk multiplier. First Street’s 11th National Risk Assessment: Portfolio Pressures documents how “idiosyncratic” events are giving way to same-year, multi-hazard hits across regions, lifting portfolio tail losses. To reflect that reality, we incorporate cross-peril and cross-property correlations when producing portfolio loss curves—showing that ≤1% AEP outcomes can be materially higher than single-peril views, which is exactly where capital planning is most exposed. How exposure becomes financial stress. After a hazard, the credit channel runs through a few tight mechanisms: non-renewals and lender-placed insurance raise escrow and DTI; deductibles and sublimits shift more loss to borrowers; unrepaired damage and appraisal haircuts erode equity and push LTV higher; and refi frictions (overlays, comp scarcity, proof of coverage) slow prepayments. These effects are most acute for LMI households with thin buffers, accelerating roll rates and raising LGD. Because they cluster geographically, localized shocks become correlated loss periods at the portfolio level. Why this points to adaptation and resilience. If climate amplifies losses, targeted resilience is a return-on-avoided-loss strategy: flood management that reduces depth and downtime; wildfire mitigation that lowers damage severity and insurance frictions; water and grid upgrades that cut business interruption; building hardening that preserves collateral value and speeds appraisals. The financial translation is straightforward—lower expected loss and tighter tails, better cash-flow durability, improved cure rates, and more stable LTV/DSCR. Connecting market opportunity to portfolio need. The adaptation categories McKinsey highlights line up with where portfolios experience the largest stress multipliers. The job now is to direct capital to site-specific measures with measurable payoff—prioritizing assets and geographies where resilience most improves cash flows, collateral values, and loss distributions while reducing the chance that local shocks scale into portfolio-level credit stress. The aim is simple: quantify climate-to-credit pathways, target interventions with measurable payoff, and finance resilience at scale, so portfolios get stronger while communities face fewer disruptions.

𝗨𝗻𝗹𝗼𝗰𝗸𝗶𝗻𝗴 𝗘𝗻𝘃𝗶𝗿𝗼𝗻𝗺𝗲𝗻𝘁 𝗥𝗶𝘀𝗸 𝗜𝗻𝘁𝗲𝗹𝗹𝗶𝗴𝗲𝗻𝗰𝗲 𝘄𝗶𝘁𝗵 5 𝗻𝗲𝘄 𝗱𝗮𝘁𝗮𝘀𝗲𝘁𝘀 𝗶𝗻 𝗙𝗦𝗤 𝗦𝗽𝗮𝘁𝗶𝗮𝗹 𝗛3 𝗛𝘂𝗯 We've just expanded our Spatial H3 Hub with five new datasets that provide unprecedented insights for disaster planning, environmental monitoring, and climate resilience. 𝗧𝗵𝗲𝘀𝗲 𝗱𝗮𝘁𝗮𝘀𝗲𝘁𝘀 𝘄𝗵𝗶𝗰𝗵 𝗮𝗿𝗲 𝗼𝘁𝗵𝗲𝗿𝘄𝗶𝘀𝗲 𝗼𝗻𝗹𝘆 𝗮𝘃𝗮𝗶𝗹𝗮𝗯𝗹𝗲 𝗶𝗻 𝗿𝗮𝘀𝘁𝗲𝗿 𝗳𝗼𝗿𝗺𝗮𝘁𝘀 𝗮𝗿𝗲 𝗻𝗼𝘄 𝗮𝗰𝗰𝗲𝘀𝘀𝗶𝗯𝗹𝗲 𝗶𝗻 𝘁𝗮𝗯𝘂𝗹𝗮𝗿 𝗳𝗼𝗿𝗺𝗮𝘁 𝗽𝗿𝗲-𝗶𝗻𝗱𝗲𝘅𝗲𝗱 𝘁𝗼 𝗛3 𝗰𝗲𝗹𝗹𝘀: 1. 𝗙𝗘𝗠𝗔 𝗡𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗙𝗹𝗼𝗼𝗱 𝗛𝗮𝘇𝗮𝗿𝗱 𝗟𝗮𝘆𝗲𝗿 — Cover 90% of the U.S. population with comprehensive flood risk data. Perfect for insurance modeling, urban planning, and emergency preparedness. 2. 𝗨𝗦𝗔 𝗦𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲𝘀 — The nation's first complete inventory of structures >450 sq ft, including critical infrastructure like hospitals, schools, and emergency facilities. Essential for disaster response and homeland security planning. 3. 𝗛𝘂𝗺𝗮𝗻 𝗙𝗼𝗼𝘁𝗽𝗿𝗶𝗻𝘁 (100𝗺 𝗥𝗲𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻) — Track human pressures on nature globally from 2017-2021. With standardized scores (0-50) covering everything from urbanization to infrastructure, this enables precise habitat risk assessments and biodiversity conservation planning. 4. 𝗚𝗹𝗼𝗯𝗮𝗹 𝗗𝗿𝗶𝘃𝗲𝗿𝘀 𝗼𝗳 𝗙𝗼𝗿𝗲𝘀𝘁 𝗟𝗼𝘀𝘀 — Powered by WRI and Google DeepMind's cutting-edge AI, this dataset reveals why we're losing forests globally (2001-2024). From agriculture to wildfires, understand the root causes at 1km resolution. 5. 𝗖𝗛𝗘𝗟𝗦𝗔 𝗖𝗹𝗶𝗺𝗮𝘁𝗲 𝗩𝗮𝗿𝗶𝗮𝗯𝗹𝗲𝘀 (𝗦𝗦𝗣370) — High-resolution climate projections through 2070 under an intermediate-pessimistic scenario. Critical for long-term infrastructure planning and climate adaptation strategies. 𝗔𝘁 𝗙𝗼𝘂𝗿𝘀𝗾𝘂𝗮𝗿𝗲, 𝘄𝗲 𝗯𝗲𝗹𝗶𝗲𝘃𝗲 𝗯𝗲𝗻𝗲𝗳𝗶𝘁𝘁𝗶𝗻𝗴 𝗳𝗿𝗼𝗺 𝗴𝗲𝗼𝘀𝗽𝗮𝘁𝗶𝗮𝗹 𝗱𝗮𝘁𝗮 𝘀𝗵𝗼𝘂𝗹𝗱𝗻'𝘁 𝗿𝗲𝗾𝘂𝗶𝗿𝗲 𝘄𝗿𝗲𝘀𝘁𝗹𝗶𝗻𝗴 𝘄𝗶𝘁𝗵 𝗰𝗼𝗺𝗽𝗹𝗲𝘅 𝗱𝗮𝘁𝗮 𝗳𝗼𝗿𝗺𝗮𝘁𝘀. That's why we focus on making these critical datasets easily accessible and analysis-ready, so you can focus on building models benefitting from geospatial data. Checkout our 𝗙𝗦𝗤 𝗦𝗽𝗮𝘁𝗶𝗮𝗹 𝗛3 𝗛𝘂𝗯 𝘁𝗼𝗱𝗮𝘆 (link in comments)!

📊 Check out the Sustainability Risk Tool Dashboard! Over 100 tools to compare across climate, transition, and nature risks! As a climate leader who sees firsthand how quickly the risk landscape is shifting, I know how valuable it is for financial institutions to use the right tools.  That’s why I find the dashboard from United Nations Environment Programme Finance Initiative (UNEP FI) Risk Centre so useful. In my time leading the Risk Programme, I was proud to begin work on the climate risk dashboard, which has grown into the sustainability tool dashboard. This open-access resource offers an overview of more than 100 tools, detailing their features, methodologies and use cases across climate risks, nature and biodiversity, pollution and social risks.  Updated quarterly, it now incorporates insights from UNEP FI’s Climate Risk Landscape Report, giving financial institutions a clearer and more integrated view of the evolving risk tools market. Key functionality includes:  🧩 Classification by risk type to support comparability  🏭 Sectoral coverage from energy to real estate, agriculture and more  📈 Side-by-side comparison to help identify gaps and choose the right tools  🔎 Searchable database of tool descriptions and solutions for targeted use  🌐 Coverage of cross-cutting themes such as biodiversity, water and carbon for holistic assessments Explore the Dashboard here: https://lnkd.in/ebivVmEH  What challenges are you facing in finding the right risk tools? And which ones have been most useful? Share your thoughts in the comments! 

𝗧𝗵𝗲 𝗕𝗮𝗻𝗸 𝗼𝗳 𝗘𝗻𝗴𝗹𝗮𝗻𝗱 𝗷𝘂𝘀𝘁 𝗿𝗮𝗶𝘀𝗲𝗱 𝘁𝗵𝗲 𝗯𝗮𝗿 𝗼𝗻 𝗰𝗹𝗶𝗺𝗮𝘁𝗲 𝗿𝗶𝘀𝗸 𝘀𝘂𝗽𝗲𝗿𝘃𝗶𝘀𝗶𝗼𝗻. They have moved from guidance to governance. From principles to board-level expectations. The PRA's new consultation paper proposed a change in climate risk governance for the UK financial system. These recommendations are long overdue. This is what's being proposed: 🔸 𝗚𝗼𝘃𝗲𝗿𝗻𝗮𝗻𝗰𝗲 𝗮𝗰𝗰𝗼𝘂𝗻𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗶𝘀 𝗯𝗲𝗶𝗻𝗴 𝗲𝗹𝗲𝘃𝗮𝘁𝗲𝗱. Boards and senior management are now 𝙚𝙭𝙥𝙚𝙘𝙩𝙚𝙙 to 𝘰𝘸𝘯 climate risk, embedding it into governance structures, risk appetites, and strategic oversight. 🔸 𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼 𝗮𝗻𝗮𝗹𝘆𝘀𝗶𝘀 is no longer a one-off compliance exercise. It must now be conducted 𝘳𝘦𝘨𝘶𝘭𝘢𝘳𝘭𝘺, feeding directly into strategic decisions and risk appetites. That includes 𝗿𝗲𝘃𝗲𝗿𝘀𝗲 𝘀𝘁𝗿𝗲𝘀𝘀 𝘁𝗲𝘀𝘁𝗶𝗻𝗴—a powerful tool that forces institutions to confront their most vulnerable assumptions. 🔸 𝗗𝗮𝘁𝗮 𝗾𝘂𝗮𝗹𝗶𝘁𝘆 𝗮𝗻𝗱 𝗱𝗶𝘀𝗰𝗹𝗼𝘀𝘂𝗿𝗲 𝘀𝘁𝗮𝗻𝗱𝗮𝗿𝗱𝘀 𝗮𝗿𝗲 𝘁𝗶𝗴𝗵𝘁𝗲𝗻𝗶𝗻𝗴. Expect more scrutiny of internal datasets, risk models, and how disclosures align with real-world exposures and transition plans. 🔸 𝗣𝗿𝗼𝗽𝗼𝗿𝘁𝗶𝗼𝗻𝗮𝗹𝗶𝘁𝘆 𝗶𝘀 𝗻𝗼 𝗹𝗼𝗻𝗴𝗲𝗿 𝗽𝗮𝘀𝘀𝗶𝘃𝗲. The PRA's expectations must now be 𝘵𝘢𝘪𝘭𝘰𝘳𝘦𝘥 to a firm's exposure and complexity. That means more explicit justifications for methodology, sharper risk differentiation, and a more active approach to applying proportionality—not less responsibility, but smarter allocation. 🔸 𝗧𝗵𝗲 𝗣𝗥𝗔 𝗶𝘀 𝗺𝗼𝘃𝗶𝗻𝗴 𝘁𝗼 𝗮𝗹𝗶𝗴𝗻 𝘄𝗶𝘁𝗵 𝗴𝗹𝗼𝗯𝗮𝗹 𝘀𝘁𝗮𝗻𝗱𝗮𝗿𝗱𝘀—from the Basel Committee to the IAIS and beyond. This means the bar is rising in the UK and across the global financial system. 𝗠𝘆 𝘁𝗮𝗸𝗲 Recent studies indicate that financial institutions may underestimate climate-related losses by as much as 70%, highlighting the urgency for more robust risk assessment frameworks. By embedding climate considerations into core supervisory frameworks, the BoE acknowledges that climate risk is not a peripheral concern but a central financial stability issue. This proactive approach strengthens the resilience of the UK's economic system and sets a precedent for integrating climate risk into strategic decision-making globally. Please respond to the consultation here: https://lnkd.in/ewQWiCQe _____________ 𝘛𝘰 𝘴𝘦𝘦 𝘮𝘰𝘳𝘦 𝘰𝘧 𝘮𝘺 𝘱𝘰𝘴𝘵𝘴 𝘪𝘯 𝘺𝘰𝘶𝘳 𝘧𝘦𝘦𝘥, 𝘱𝘭𝘦𝘢𝘴𝘦 𝘧𝘦𝘦𝘭 𝘧𝘳𝘦𝘦 𝘵𝘰 𝘭𝘪𝘬𝘦 𝘰𝘳 𝘤𝘰𝘮𝘮𝘦𝘯𝘵 𝘰𝘯 𝘵𝘩𝘪𝘴 𝘱𝘰𝘴𝘵. 𝘓𝘪𝘯𝘬𝘦𝘥𝘐𝘯 𝘱𝘶𝘴𝘩𝘦𝘴 𝘤𝘰𝘯𝘵𝘦𝘯𝘵 𝘺𝘰𝘶 𝘪𝘯𝘵𝘦𝘳𝘢𝘤𝘵 𝘸𝘪𝘵𝘩. 𝘍𝘰𝘭𝘭𝘰𝘸 𝘮𝘦 𝘰𝘯 𝘓𝘪𝘯𝘬𝘦𝘥𝘐𝘯: Scott Kelly

🌟 Adapting to Climate Change: How Risk Models Are Evolving Is your underwriting prepared for the challenges of a changing climate? 🌍 Climate change isn’t a distant threat—it’s happening now, and its impact on the insurance industry is profound. Working across markets like the UK, LatAm, Japan, and Australia, I’ve witnessed how global carriers are stepping up to meet these challenges. 🔍 What’s new in climate risk modeling? 🌪️ 1. Real-time risk assessment – Advanced predictive analytics and real-time data are helping carriers stay ahead of risks like hurricanes and wildfires. 🌎 2. Region-specific strategies – In LatAm, solutions must address localized vulnerabilities, while Europe’s focus on sustainability demands compliance-driven approaches. ⚡ 3. Parametric insurance on the rise – Fast, transparent payouts and simplified claims processes make these products a game-changer for high-risk sectors. 🚀 Takeaway: The insurers who embrace tech, tailor strategies regionally, and innovate their offerings will lead the way in both resilience and growth. 💬 What’s your biggest challenge in integrating climate risks into underwriting? Let’s discuss ideas and collaborate to build a more sustainable insurance future. #SustainableInsurance #ClimateChange #RiskModeling #UnderwritingInnovation #InsuranceLeadership #InsuranceCareersMonth