"'Physical risk' or 'climate impact risk' used to be a niche concern... That’s changed quickly... That said, there’s a steep learning curve with assessing physical climate risk. This includes figuring out which climate-related hazards you’re analyzing—wildfires? flooding? 1/5

"extreme heat?—and how far into the future you’re looking—a few years? several decades?—and where the physical assets and supply chains you’re interested in are located. You need to identify what you’re concerned about: A threshold temperature beyond which facilities—or 2/5

"people—might be unable to function properly? The level of storm surge that could ruin a municipality’s sewage system?

The next step is to actually overlay the data about expected climate change. This is where it gets into really niche expertise. 3/5

"The IIGCC report cautions against consultants who use 'black box' approaches, where the method for generating an estimate is opaque or proprietary." 4/5

From @Bloomberg https://www.bloomberg.com/news/articles/2020-06-12/investors-are-in-a-race-to-find-the-best-models-of-climate-risk

This is an area we @wearefpc are active in – our portfolio company @CervestEarth is a pioneer in assessing climate risk exposure for real assets through ML and Bayesian non parametric modelling. Watch this space. 5/5