Climanomics® Climate Risk Analytics Platform
The world has witnessed an alarming increase in the number of extreme weather events in recent years. The past 20 years saw a 74% increase in disasters linked to natural hazards compared to the prior two decades. This has resulted in 1.23 million lives claimed, 4 billion people affected and $2.7 trillion in global economic losses, according to the UN.
Climate change will transform our planet, with some geographies at greater risk than others – knowing where these risks are and when they will become material is challenging. At the Climate Service, now part of S&P Global, climate experts and data scientists have built an easy-to-use, science-backed climate risk analytics platform to help you identify and measure climate risk in your assets, business, and investment portfolio.
The Climanomics® platform provides climate risk analytics for seven physical hazards (drought, wildfire, temperature extreme, water stress, coastal flooding, river flooding, and tropical cyclones) to real assets, under four climate scenarios based on the Representative Concentration Pathways (RCPs). Adopted by the IPCC, the pathways describe different climate futures, all of which are considered possible depending on the volume of GHGs emitted in the years to come. This is all delivered via an easy-to-use SaaS platform built by a team of climate scientists, technologists, economists, data scientists, and finance professionals.
The platform makes it easy for companies and investors to measure the climate risk of their assets and portfolios. Customers upload basic information about their assets – type, location, value – and the platform will model expected losses due to climate change. Users can analyse seven different hazards for more than 250 asset types anywhere in the world. One-click scenario analysis enables them to explore different climate futures out to the year 2100. Climanomics® uses a robust, transparent, and verifiable global risk modelling methodology that leverages a Hazard-Vulnerability-Risk framework, similar to that used by insurance companies.
The expected loss outputs can be used for analysing climate risk in:
- Business operations.
- Risk management.
- Strategic planning.
- Investment due diligence.
- Portfolio analysis.
- Credit modelling for residential (mortgage) and commercial lending.
- Project finance due diligence.
- TCFD reporting.
The tool works as a standalone solution to screen a global portfolio of assets and to identify what risks will become material, to which assets, in what timeframe. Once the high-risk assets are identified, customers access results (via interactive dashboards or download) that can be followed up with an engineering level analysis and used to support mitigation and adaptation planning.
The Climanomics® platform is built on the world’s latest, most rigorous climate science datasets, including from the IPCC, the NOAA, the WWF, and much more. The models on which the analytics are based are available directly in the platform, and the complete literature-based document library of impact functions can also be made available for audit and explainability purposes.
The Climanomics® platform is available as an annual subscription, priced based on number of assets. There are no setup or installation costs, though customers may opt to have models built for custom/new asset types at additional cost.
Having transparency into climate risk means that companies and investors can identify and manage climate risks over the medium and long term, protecting millions of dollars in assets from impacts due to climate change. Climanomics’ financial impact-based outputs provide actionable and decisionable insights that help companies manage risk and capture opportunities associated with climate change.
The mortgage team at a large bank was working closely with their credit risk colleagues to understand potential weaknesses within the bank’s mortgage portfolio. It was clear to both teams that physical climate risks should be taken into account given the alarming increase in the number of extreme weather events in recent years. This would require the expertise of specialists who had developed proven methodologies to project the impact of such hazards on key portfolios over time to identify the most at-risk assets.
The Climanomics® platform would provide the mortgage team with:
- A rigorous screening of physical risks – starts by utilizing publicly available raw climate data from sources such as the IPCC, the NOAA, the WWF, and much more.
- A price on climate change – quantifies physical risks in financial terms (average annual loss) that are aligned with the recommendations of the TCFD.
- Scenario analysis – incorporates four climate scenarios based on the Representative Concentration Pathways (RCPs), a GHG concentration trajectory adopted by the IPCC.
- Visualizations of insights – delivers simple charts, graphs, narrative and data for export that provide insights into the location, severity and timing of climate-related risks.
- An additional lens to evaluate risks – investigates market-level trends the probability of municipal adaptation and insurability as an additive layer to the outputs from the physical risk analysis.
Read the full case study.