Understanding the Physical Risk of Climate Change: a Business Exposure Perspective

There has been an observable rise in the frequency and severity of weather hazards (e.g., tropical cyclones, wildfires, tornadoes, etc.) that are likely attributable to global climate change. These hazards pose a significant risk to businesses across the globe who have assets in regions that could experience building damage or supply chain interruption due to these increasing hazards. We developed a suite of models that result in global maps of the variability in frequency and severity of 12+ climate change related hazards. These models take, as inputs, various output from global climate models (depending on the hazard) and observational data from governmental sources. An example is the use of tornado observational data, which we can transform to a uniform grid while preserving the observed Enhanced Fujita Scale rankings before continuing model development. From the inputs, we do a combination of the following: 1. relate the observational record of a hazard to observed weather parameters, and 2. develop an environmental index of a hazard (e.g., fire environmental index) over the historical period. Once a historical layer is created and validated, we can use the same methodology on CMIP6 output over future projections for various scenarios. To use this modeling for business applications, we create indices of the results from this work that are combined with the latitude and longitude of asset locations to help assess potential exposure across a profile of locations important to any given business. It is imperative that climate change science helps drive and determine robust risk evaluation to businesses seeking to plan and mitigate the impact of future climate change.