Related papers: Physical Climate Risk in Asset Management
Climate models robustly imply that some significant change in precipitation patterns will occur. Models consistently project that the intensity of individual precipitation events increases by approximately 6-7%/K, following the increase in…
The response of precipitation extremes to climate change is considered using results from theory, modeling, and observations, with a focus on the physical factors that control the response. Observations and simulations with climate models…
This paper addresses estimates of climate risk embedded within a bank credit portfolio. The proposed Climate Extended Risk Model (CERM) adapts well known credit risk models and makes it possible to calculate incremental credit losses on a…
Climate change and other anthropogenic pressures are likely to induce tipping points in marine ecosystems, potentially leading to declines in primary productivity and fisheries. Despite increasing attention to nature-related financial risks…
The climate system is a forced, dissipative, nonlinear, complex and heterogeneous system that is out of thermodynamic equilibrium. The system exhibits natural variability on many scales of motion, in time as well as space, and it is subject…
The document provides an overview of financial climate risks. It delves into how climate change impacts the global financial system, distinguishing between physical risks (such as extreme weather events) and transition risks (stemming from…
Climate change is widely expected to increase weather related damage and the insurance claims that result from it. This will increase insurance premiums, in a way that is independent of a customer's contribution to the causes of climate…
Like ESG investing, climate change is an important concern for asset managers and owners, and a new challenge for portfolio construction. Until now, investors have mainly measured carbon risk using fundamental approaches, such as with…
In this paper we discuss and address the challenges of predicting extreme atmospheric events like intense rainfall, hail, and strong winds. These events can cause significant damage and have become more frequent due to climate change.…
Earth System Models (ESMs) are the state of the art for projecting the effects of climate change. However, longstanding uncertainties in their ability to simulate regional and local precipitation extremes and related processes inhibit…
We study the dynamics of correlation and variance in systems under the load of environmental factors. A universal effect in ensembles of similar systems under the load of similar factors is described: in crisis, typically, even before…
In this article there is no intention to repeat basic concepts about risk management, but we will try to define why often is usefull the time series analysis during the assessment of risks, and how is possible to compute a significative…
By treating the financial market as a thermodynamic system, we establish a one-to-one correspondence between thermodynamic variables and economic quantities. Measured by the expected loss under the worst-case scenario, financial risk caused…
Extreme events, exacerbated by climate change, pose significant risks to the energy system and its consumers. However there are natural limits to the degree of protection that can be delivered from a centralised market architecture.…
Wildfires are natural disasters capable of damaging economies and communities. When wildfires become uncontrollable, Incident Manager Teams (IMT's) dispatch response vehicles to key assets to undertake protective tasks and so mitigate the…
I study the dynamic, general equilibrium implications of climate-change-linked transition risk on macroeconomic outcomes and asset prices. Climate-change-linked expectations of fossil fuel restrictions can produce a ``run on fossil fuels''…
Sea-levels are rising in many areas around the world, posing risks to coastal communities and infrastructures. Strategies for managing these flood risks present decision challenges that require a combination of geophysical, economic, and…
Modeling the risk of extreme weather events in a changing climate is essential for developing effective adaptation and mitigation strategies. Although the available low-resolution climate models capture different scenarios, accurate risk…
Dynamical downscaling with high-resolution regional climate models may offer the possibility of realistically reproducing precipitation and weather events in climate simulations. As resolutions fall to order kilometers, the use of explicit…
In this paper, we present a methodology for measuring the impact of scenarios on the expected losses of exposures by leveraging the existing provisioning infrastructure within financial institutions, where scenario effects are captured…