Related papers: Physical Climate Risk in Asset Management

Carbon credits are a key component of most national and organizational climate strategies. Financing and delivering carbon credits from forest-related activities faces multiple risks at the project and asset levels. Financial mechanisms are…

Extreme weather events are becoming more common, with severe storms, floods, and prolonged precipitation affecting communities worldwide. These shifts in climate patterns pose a direct threat to the insurance industry, which faces growing…

Understanding extreme ocean environments and their interaction with fixed and floating structures is critical for the design of offshore and coastal facilities. The joint effect of various ocean variables on extreme responses of offshore…

We consider an optimal control problem of a property insurance company with proportional reinsurance strategy. The insurance business brings in catastrophe risk, such as earthquake and flood. The catastrophe risk could be partly reduced by…

Reliable estimates of indirect economic losses arising from natural disasters are currently out of scientific reach. To address this problem, we propose a novel approach that combines a probabilistic physical damage catastrophe model with a…

Extreme environmental events such as severe storms, drought, heat waves, flash floods, and abrupt species collapse have become more prevalent in the earth-atmosphere dynamic system in recent years. In order to fully understand the…

Human activities accelerate consumption of fossil fuels and produce greenhouse gases, resulting in urgent issues today: global warming and the climate change. These indirectly cause severe natural disasters, plenty of lives suffering and…

Addressing climate change effectively requires more than cataloguing the number of policies in place; it calls for tools that can reveal their thematic priorities and their tangible impacts on development outcomes. Existing assessments…

The instability of the financial system as experienced in recent years and in previous periods is often linked to credit defaults, i.e., to the failure of obligors to make promised payments. Given the large number of credit contracts, this…

Risk management is particularly concerned with extreme events, but analysing these events is often hindered by the scarcity of data, especially in a multivariate context. This data scarcity complicates risk management efforts. Various tools…

Using lightning strikes as an example, two possible schemes are discussed for the attribution of changes in event frequency to climate change, and estimating the cost associated with them. The schemes determine the fraction of events that…

In recent years, the growing frequency and severity of natural disasters have increased the need for effective tools to manage catastrophe risk. Catastrophe (CAT) bonds allow the transfer of part of this risk to investors, offering an…

Climate change has emerged as a significant global concern, attracting increasing attention worldwide. While green bubbles may be examined through a social bubble hypothesis, it is essential not to neglect a Climate Minsky moment triggered…

This paper introduces a novel approach to financial crisis prediction by establishing a thermodynamic-like framework derived from the fluctuation theorem of statistical physics. We define market temperature through the probability ratio of…

Internal climate variability arises from the climate system's inherently chaotic dynamics. Quantifying it is essential for climate science, as it enables risk-based decision-making and differentiates between externally forced change and…

Climate change is expected to significantly affect the physical, financial, and economic environments over the long term, posing risks to the financial health of general insurers. While general insurers typically use Dynamic Financial…

Conventional hurricane track generation methods typically depend on biased outputs from Global Climate Models (GCMs), which undermines their accuracy in the context of climate change. We present a novel dynamic bias correction framework…

The interaction between extreme weather events and interdependent critical infrastructure systems involves complex spatiotemporal dynamics. Multi-type emergency decisions within energy-transportation infrastructures significantly influence…

We present a general framework for the estimation of corporate default based on a firm's capital structure, when its assets are assumed to follow a pure jump L\'evy processes; this setup provides a natural extension to usual default metrics…

In the Vasicek credit portfolio model, tail risk is driven primarily by the asset-correlation parameter, yet empirically is subject to correlation risk. We propose a stochastic correlation extension of the Vasicek framework in which the…