Climate on Demand provides foundational insight through rigorous data and analytics that define current and forward-looking location-specific threats to real assets from climate-related event damages and business disruption.
Understand physical climate risks to individual assets and portfolios with:
Receive Climate on Demand climate risk analytics tailored to any property in the world and start gaining climate insights today.
Integrate climate risk into these key business objectives:
Impact Assessment for Climate Materiality
Climate Impact Assessment for Regulatory and Disclosure Reporting
Risk Screening for Stakeholder Engagement
Rigorous modeling validates projections of potential business and financial impacts from climate change. Moody’s Climate on Demand offers a framework to support climate risk assessment from early-stage strategic planning to mature incorporation of climate risk into investment decision-making. The extendable model provides a consistent view of physical climate risk throughout the risk management journey and across organizational needs.
The complexity of climate risks – acute, chronic, and compounding, require sophisticated analytics that incorporate hazard impacts, asset characteristics, and location that influence real damage and business interruption. Moody’s Climate on Demand leverages highly innovative climate-conditioned catastrophe models to provide robust insights at high enough resolutions to measure physical risk financial impacts.
Evaluating physical climate risks requires an understanding of the various drivers of risk that could impact predicted outcomes. Moody’s Climate on Demand models combine bottom-up weather simulations using climate model output and the latest scientific consensus on climate change, to calculate the expected frequency and severity of chronic and acute climate events both now and in the future.
Individual property characteristics are a significant factor in modeling hazard damages from wildfires to floods. Moody’s Climate on Demand is informed by on-the-ground post-event damage reconnaissance surveys that capture building and facility detailed damage assessments. Additionally, machine learning techniques are utilized in modeling how factors such as building type, industry, and regional building codes can impact the damage and financial losses.
Location influences climate-related damage and disruption. Factors such as local terrain, geology, land-use, and local guidelines on built environment influence expected damage. Intensive modeling approaches are applied to data sparse regions to address not only historical hazard data scarcity but also macro scale mitigation efforts, such as flood defenses.
The scientific community is reaching consensus that to measure climate change impacts at the resolution required to make financial decisions, both general circulation models (GCMs) and catastrophe (cat) risk models are needed. GCMs are instrumental in modeling large-scale, long-term, global modes of variability and trends in atmospheric and ocean circulation systems but they cannot be run at high enough resolutions to capture all meaningful processes at regional and local levels. Catastrophe models, on the other hand, are used to model near-term outcomes in extreme weather and have been used in the insurance industry (one of the most highly regulated financial services industries) for over three decades to protect and deploy capital efficiently.
Comprehensive Modeling Inputs that Produce Robust and Actionable Insights
Compounding pressures from chronic heat and water stress, changing land-use, wind speed and direction all impact available fuel supply and wildfire risk.
Embers, radiant heat, and smoke contribute to potential property damages and are modeled against property types and associated industries.
Urban expansion and population growth further exacerbate wildfire risk, increasing hazard exposure and potential financial impacts.
Understand the relative threat to an individual asset from climate change impacts including: heat stress, water stress, floods, hurricanes and typhoons, sea level rise, and wildfires.
Add dimension to physical risk insight with relative scoring of potential damage and business disruption defined by asset-specific characteristics that influence impact relative to the scored hazard.
Deepen insight with financial estimates of damage and business interruption with metrics that model potential impact and build on real-world, reported event costs, on-the-ground engineering assessments, and industry-validated climate science.
Learn about recent product insights plus perspectives and analysis on key trends shaping global climate change risk assessment and sustainable finance.
This summer, the Northern Hemisphere saw many temperature records broken.
July 2023 was named the hottest month on Earth since records began in 1880, and July 6 is potentially the hottest day on Earth in the last 120,000 years, as it becomes clear that heat waves are no longer isolated meteorological events.
The risks associated with supply chain disruption from weather and climate-related events have been highlighted with regularity across the globe over recent years.
Here are just four of many examples:
Numerous headline-grabbing extreme events, and in particular heatwaves, have impacted the globe during the first half of 2023.
And for July 2023, preliminary data has indicated that the planet experienced its hottest week and month since the beginning of the instrumental record, and thus, most likely, its warmest in millennia.
In a world where it feels as if the financial markets are ruled by short-termism and a focus on quarterly corporate reporting, in contrast, asset owners stand out by managing their portfolios on time horizons measured in decades or even longer.
With trillions of dollars in assets under management and a goal of long-term well-being for their beneficiaries and other stakeholders, risk management practices for asset owners must be robust.
The latest version of Moody’s Climate on Demand is here and includes significant enhancements in quantification capabilities specific to modeling financial impacts from physical climate risks.
If you own or manage assets, here are some examples of important questions that need urgent answers:
Today’s Climate on Demand is already helping businesses make better decisions with global hazard coverage that generates on-demand, location-specific climate risk scores covering floods, heat stress, hurricanes and typhoons, sea level rise, water stress, and wildfires. The next version of Moody’s Climate on Demand is now here and will deliver significant enhancements in quantification capabilities specific to modeling financial impacts from physical climate risks.
Climate change represents one of the most uncertain and far-reaching integrated risk challenges faced by the global economy today. Measuring the potential exposure to climate change for any given location in the world and even extending this measurement to expected physical damage and associated downstream business implications, is an emerging requirement for financial investors.
Since its inception in 2015, the Task Force on Climate-Related Financial Disclosures (TCFD), created by the Financial Stability Board (FSB), has led the way in establishing consistent climate-related financial risk disclosures for use by companies, banks, and investors in providing information to stakeholders.
The need to understand the physical impacts of climate change grows by the day, with asset managers, investors, banks, corporations, and governments all under increasing pressure to identify and manage the impact of climate change on financial performance.
Whether you are trying to understand exposure to physical climate risks for a lending portfolio, establish how critical facilities could be disrupted by climate events, or build a TCFD report for your business, it is important to know how your climate risk is estimated, and how its outputs are ultimately validated.
We are excited to introduce Moody’s Climate on Demand version 2. This major version update to the existing Climate on Demand application has been built for those looking to understand the financial impacts of climate change on their business.
Looking at the countless examples of flooding events during 2022, including in the United States, Australia, South Africa, and Pakistan, they all highlight the devastating effects that flooding poses to the affected communities.
Following increases in climate-driven losses, asset managers and owners urgently need to answer this question: How can I accurately assess the impact of climate and climate change on my asset portfolio to inform strategies that can help reduce my climate risk exposure?
As the market for physical climate risk solutions grows, both the degree of divergence and uncertainty remains very high for risk scoring estimates across different applications, making it nearly impossible for customers to confidently navigate physical climate risk.
The potential impact of sea level rise cannot be taken lightly. According to Moody’s Climate on Demand application, by 2040, 135 million people and up to 9% of GDP from the world’s 10 largest economies will be exposed to rising sea levels and associated flood risk.
As the need to understand climate risk grows ever more urgent, asset managers, lenders, corporates, and businesses all need to be confident that their climate risk models can capture the complexity of climate and weather events – in order to satisfy their regulators, boards, and shareholders.
With loss estimates placing Major Hurricane Ian as one of the costliest hurricanes to ever hit the U.S., a question arises around who will pay to repair and reconstruct the tens of thousands of affected Florida properties and compensate businesses for lost income.
