From Data to Decisions: Enhancing Economic Resilience through Climate Risk Manager

The increasing frequency and severity of climate-related events pose significant challenges to financial institutions, municipalities, and asset owners. As insurers, it is crucial to deepen our understanding of the impacts of severe catastrophic events on the Canadian landscape within the context of climate change. This presentation introduces the Climate Risk Manager (CRM), a state-of-the-art tool designed to offer granular, asset-level risk assessments and promote economic adaptation strategies, particularly for credit unions and insurers.

In response to OSFI B15 requirements, which mandate Canadian financial institutions to disclose their climate risk exposures, CRM provides a transparent and customizable solution to meet these regulatory demands. By incorporating advanced catastrophic models and simulating 50,000+ years of climate catalogue events, CRM translates climate events into probable economic losses, illustrating potential impacts. This integration of exposure, vulnerability, and event data empowers financial institutions to make informed decisions regarding mortgage approvals, portfolio diversification, and regulatory compliance, effectively managing climate-related risks while adhering to industry standards.

Through authentic case studies, including a demonstration with a credit union, this presentation will showcase CRM’s capabilities in identifying risk levels and optimizing insurance coverage, thereby supporting strategic decision-making for enhanced economic resilience. The CRM platform features tools such as the Exposure Explorer and Hazard Explorer, which facilitate asset portfolio analysis and risk assessment for floods and wildfires. By generating synthetic historical climate data, CRM delivers comprehensive risk assessments and loss metrics, including expected average loss and the variance of expected quantile loss. Its precision in risk evaluation is particularly beneficial in urban areas, despite data limitations in rural geocoding.

Emphasizing transparency, CRM enables users to backtrack and understand specific results and assumptions, empowering stakeholders to make informed strategic decisions that navigate the complexities of climate change impacts effectively. Looking forward, CRM will evolve by integrating projected climate scenarios and additional natural catastrophe perils (e.g., severe convective storms and hurricanes). This adaptability positions CRM as a critical resource for navigating future climate challenges, ensuring that organizations remain resilient in the face of evolving climate change risks.