​​​​​Physical climate risk assessment for a company or a group of locations: what does it look like?

 

Say you have a group of physical assets (portfolio) with 200 locations, factories, facilities, office buildings. We take all climate data for all hazards and for each location, and aggregate these asset-level risk scores into "share of portfolio at risk" metric. 

 

The short (“starter”) version of the report is essentially a high-level executive summary.

It does not cover all hazards, only two. When comparing across hazard types, these two stand out for their intensity.

It does not discuss individual assets; instead, it reports portfolio-level percentages. For example, if the primary two hazards are Flood and Heatwave, then we would say: 

 

- A% exposed to direct flood damage,

- B% exposed to major flood risk without physical damage,

- C% exposed to extreme heatwave risk.

 

The short (“starter”) version of the report answers these questions:

 

- What are the main two hazards for this group of locations (portfolio)?

- How is exposure to these two primary hazards expected to evolve over time? Is there any tendency across the entire portfolio? How are the risk scores for these hazards projected to change in the future?

- What does the analysis look like for different climate scenarios across 3 future time horizons (2030, 2040, 2050)?

 

For those locations with non-zero flood risk scores, is there a possibility of direct physical damage to these facilities due to floodings?

 

Figure 5. Example of “share of portfolio at risk”, showing the main hazards for the company, with the historical split (left) and the future split (right).

 

 

Summary table: scenario analysis for “share of portfolio at risk”, example. HIST means "present day" reference: it is calculated based on all available historical data. RCPxx reflect scenarios. 

 

 

 

Summary table: share of portfolio: (a) at risk of direct flood damage; (b) adjacent to flood-prone areas (“next door”); (c) in close proximity to flood-prone areas: at risk of major business interruptions.

 

The extended version of Portfolio Scan report includes more information, it also tells:

 

- Which facilities are exposed to what? 

- Which facilities are the most exposed to these two hazards?

- How is exposure to these two primary hazards expected to evolve over time? Is there any tendency across the entire portfolio? How are the risk scores for these hazards projected to change in the future?

- What does the analysis look like for different climate scenarios across 3 future time horizons?

- For those locations with non-zero flood risk scores, is there a possibility of direct physical damage to these facilities due to floodings?