Understanding climate change’s physical risk impacts with our proprietary extreme weather modeling tool
ClimatePREDICT is a unique feature of our ClimateMAPS - climate scenario analysis solution. It allows us to incorporate GDP impacts arising from a wide range of climate-related acute physical risk drivers, including extreme weather event occurrences, direct insured and uninsured losses and urbanization rates for 1800+ cities and 150+ countries within our Ortec Finance Climate Scenarios.
How does ClimatePREDICT assess physical climate risks?
Translates open-source historical data of extreme weather frequencies and associated losses
Models the impacts of temperature anomalies, population trends and risk factors for specific weather perils (cyclones, flooding, droughts and heatwaves etc.)
Considers a city’s capabilities to respond to extreme weather
Comparing our physical climate risk approach to IFoA’s recommendations
The physical risk assessment in our 2024 climate scenario update, which utilizes ClimatePREDICT and Cambridge Econometric’s E3ME model, shows a high level of agreement with the recommendations in the Institute and Faculty of Actuaries’ report, ‘The Emperor’s New Climate Scenarios.’ The report proposes using a logistic damage function to enable a more realistic assessment of physical risk impacts, instead of the quadratic approach currently utilized by other climate scenario modeling frameworks.
Applying ClimatePREDICT to ClimateMAPS
The economic impact data generated from ClimatePREDICT is integrated with our proprietary stochastic financial model and Cambridge Econometrics E3ME macroeconomic model alongside additional insights on climate tipping points to quantify climate change risks and opportunities for investors.
Together, we believe this combined approach provides the most robust modeling available in the market, with a realistic and comprehensive assessment of climate change’s impacts under different plausible futures across a wide range of economic variables and asset classes, geographies and sectors.
About ClimateMAPS
ClimateMAPS - Ortec Finance’s award-winning climate scenario analysis solution, offered in exclusive partnership with Cambridge Econometrics, enables financial institutions to quantify their portfolio’s climate risk exposure and identify opportunities relative to a baseline with 2°C to 3 °C degrees warming. With global coverage of 600+ economic and financial variables, ClimateMAPS provides comprehensive insights to help financial institutions translate the impact of climate change on investments.
Contact
Bert Kramer
Head of Climate Research, Climate & ESG Solutions