- Moody's (RMS), Barking, United Kingdom of Great Britain – England, Scotland, Wales (keven.roy@moodys.com)
Over the past 30+ years, Moody’s/RMS has been at the forefront of catastrophe modelling, developing and supporting models for the global (re)insurance market. Those granular, bottom-up models bring together carefully calibrated stochastic simulations of extreme events with detailed assessments of the vulnerability of a wide range of building types. For any given portfolio of assets, loss distributions that incorporate a variety of local market considerations can be generated. Those models have been validated against extensive geophysical observations and against hundreds of billions of dollars of granular damage and building-specific claims data.
In this context, Moody’s/RMS has developed a novel bottom-up approach to assess the financial impacts of climate change for the broader financial sector, which leverages the respective strengths of catastrophe models and climate change model output. The ‘Climate on Demand Pro’ platform provides physical and financial risk metrics at both location- and portfolio-levels, which includes the impacts of portfolio concentration or diversification. Those metrics are provided globally, across the 21st century, for various climate scenarios and for six acute and chronic climate perils (tropical cyclones, wildfires, inland floods, coastal floods, heat stress and water stress), as well as earthquake risk. For acute perils and in core insurance markets, model development and validation benefits from the availability of the full-fledged RMS stochastic catastrophe models. However, for chronic perils (heat stress and water stress), a different approach has been used to generate the hazard and vulnerability components of the model.
This presentation will provide an overview of the methodology underpinning the heat stress model in ‘Climate on Demand Pro’, with a specific focus on the hazard and vulnerability components. Detailed results for key regions across various climate scenarios will be discussed, with a specific focus on the impact of urban heat islands on financial losses. It will be shown that heat stress could play a sizable role in future climate risk profiles. Finally, a brief overview of other features currently in development will be provided.
How to cite: Roy, K. and Khare, S.: Bottom-Up Assessment of the Financial Impacts of Climate Change: Heat Stress Modelling in the ‘Climate on Demand Pro’ Platform, EGU General Assembly 2025, Vienna, Austria, 27 Apr–2 May 2025, EGU25-19680, https://doi.org/10.5194/egusphere-egu25-19680, 2025.