Yes, we provide both historical risk assessment and forward-looking scenario analysis.

For many use cases, such as Expected Loss modeling and Sustainability Due Diligence and Climate Stress Testing, the forward looking scenario analysis is the default setting. Three key scenarios are explained here below.

Temperature target Global Warming	IPCC scientific technical scenario name	NGFS scenario name
+1.5 - 2°C	SSP1 RCP2.6	Orderly
+2 - 4°C	SSP2 RCP4.5	Disorderly
+4 - 6°C	SSP5 RCP8.5	Hot-house world

Who defines these scenarios?

The IPCC is a group of experts reviewing the achievements in climate science. They don't create models, but they formalise the definitions of climate scenarios. All climate models run with the IPCC scenarios. The technical names of these scenarios are RCP2.6, RCP4.5 and RCP8.5. In financial literature, the human-readable names for these scenarios are 'orderly,' 'disorderly,' and the 'hot house world'.

SSP and RCP abbreviations stand for Shared Socioeconomic Pathway and Representative Concentration Pathway. 

It is worth noting that the change in global mean temperature is not the same across different climate models under the same emission scenario. Due to differences in physical assumptions between models, some climate models warm-up faster than the others.

Proper terminology for the physical climate risk assessment: << forecasts >>  (or predictions)  vs  << projections >>

The forward-looking scenario analysis for flood and wildfire is not a forecast; it’s a statistical (probabilistic) evaluation based on projected climate data years into the future. Climate scientists produce scenario analyses to evaluate the frequencies and probabilities of extreme events under different GHG emission scenarios. Scenarios allow to evaluate and quantify how weather-related exposure may change, but they do not indicate when exactly a specific event should occur.

Forward-looking climate risk assessment provides the range of possible and likely outcomes. This knowledge should be used for strategic planning years ahead, investment decisions, quantitative expected loss modeling, insurance repricing and climate stress testing rather than year-by-year prediction.

When interpreting forward-looking scenario analysis over horizons longer than a weather forecast, we’re talking about projections.

For any questions about scenarios, feel free to reach out at contact@weathertrade.net