Strategic, Quantitative Climate Risk Assessment

 

Woodard & Curran’s new and growing Climate Risk Assessment product supports public and private clients in assessing and mitigating risk related to climate change. Our approach combines Global Climate Model (GCM) extraction and downscaling, climate stressor risk quantification algorithms, big data management, geospatial visualization and mapping, resilience strategy, and engineering capabilities to deliver critical insights to climate-related liabilities and actionable recommendations.

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Evolving regulatory framework surrounding Environmental-Social-Governance (ESG) reporting increasingly requires businesses to evaluate risk associated with climate change and divulge findings and mitigation responses to the benefit of investors, insurers, and other stakeholders. Woodard & Curran’s Climate Risk Assessment product offers our clients a suite of services to compile relevant climate data, evaluate the climate stressor risks associated with their operations and geography, and plan and prioritize capital projects to mitigate those risks.  This product allows for enhanced compliance with the Financial Standards Board’s Task Force for Climate Financial Disclosures (TCFD) Guidelines and informed resilience planning.

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How it Works

 

We perform statistical extractions from GCM big data, leveraging dozens of GCM climate models and multiple future climate scenarios out to the year 2100 to evaluate the business continuity risk at our client’s assets due to potential climate change scenarios. In addition, Regional Climate Model (RCM) technology is employed and a risk score is calculated using our Microsoft Azure cloud computing resources to develop high-resolution physical risk outlooks at a specific asset. Risk scores are calculated across a given set of locations for individual stressors (e.g., coastal inundation) and as a composite score (weighted combination of multiple stressors). Locations (assets, or supply chain-critical hubs) can then be ranked and reviewed based on individual stressor risk or composite risk to determine when and where to devote risk management and resilience planning investment, as well as to elucidate to the client the nature, extent, and quantified details of risk related to climate change.

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The GCM/RCM extraction and risk score derivation results in a substantial quantity of data that needs to be organized and accessible to be valuable to our clients. We create data visualization dashboards with geo-referenced site locations and interfaces to risk information and rankings.

 

Accessible, Transparent, and Comparable Data

 

This structure allows our clients to query the evaluated infrastructure and climate risk database toward a detailed and comprehensive understanding of climate change’s impact on their collected assets. The dashboard interface allows on-the-fly analysis of all evaluated sites and their surrounding communities, filterable by dimensions such as climate stressor, region, and outlook term. Depending on complexity, we also incorporate locational metadata, allowing climate risk rankings for business divisions, geographies, market sectors, and facility types.

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Using this product, our clients can test their asset infrastructure against multiple climate stressors and scenario timelines, and group data for comparison. Whether by geography, business center, or asset type, clients can instantly visualize relative climate risk between counterparts — a functionality crucial to planning resilience investments. Users can drill down on individual facilities to see immediate, direct impacts, and analyze scenarios in the surrounding area to incorporate community climate risks that could impact business continuity, such as coastal inundation that could impact critical operations that are not confined to the walls of a facility.

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The design of our dashboard promotes substantial flexibility in how clients can manipulate and utilize data, providing meaningful insight into vulnerabilities at any scale. Distilling climate stressors to a single risk score allows quick comparison across a portfolio. Stressors are also individually analyzed, allowing clients to sort a portfolio by max risk associated with climate stressors or climate thresholds. Enhanced understanding of climate risk allows for the client to focus on the most at risk sites and most impactful stressors in building resilience and mitigation plans. In addition, the tool can be easily updated as new climate data becomes available or a client’s portfolio grows.

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Supporting ESG Compliance and Communication

 

Using this product, our clients can test their asset infrastructure against multiple climate stressors and scenario timelines, allowing them to see when and where risk is coming from. Enhanced data access and understanding of climate-related risk facilitates improved compliance with TCFD recommendations and a more comprehensive ESG program.

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When it comes to satisfying ESG obligations to regulators and stakeholders, our Climate Risk Assessment product provides a more comprehensive approach to compiling and reporting the specifics of a business’ climate risks and the actions it will peruse to manage them.

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With detailed reports and data available via dashboard, the client is empowered to make informed decisions in the planning of capital improvements to enhance resilience and sustain business continuity.  In addition, through the distillation of GCM big data into succinct risk visualizations, the client can more readily understand, manage, mitigate, and communicate their climate-related risks within their corporate reporting. 

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Climate Risk Assessment presents a comprehensive, structured, and quantitative approach that results in detailed, customized outcomes. Data-oriented and objective, the process shows a business has applied due diligence and seriousness to evaluating climate risk. This analysis platform backs up data with action, assuring investors, insurers and raters and rankers that they’re getting more than lip service.

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What’s more, the platform extends beyond the bare-bones requirements of TCFD reporting. The wealth of information Climate Risk Assessment supplies its users includes data that may fall under disclosure requirements in future regulatory conditions. The platform may also enhance supply chain sustainability reporting if users incorporate locations for supply chain assets and partners.

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Woodard & Curran first offered this service to private sector clients in 2022. The included case study outlines the application of Climate Risk Assessment in supporting a client with a vast global portfolio. We are currently exploring applications in the public sector to support resilience planning for municipal infrastructure throughout the United States.

 

Case Study: Climate Vulnerability Assessment for Global Portfolio

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Woodard & Curran is supporting a global industrial client in assessing and mitigating physical risk related to climate change. Our approach combines climate risk algorithms, climate model downscaling, data management, resilience strategy, and engineering capabilities to deliver critical insights about the client’s climate-related liabilities as well as actionable recommendations for asset hardening, long-term compliance, and business continuity.

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Our team leveraged data compiled from the Coupled Model Intercomparison Project Phase 5 and Phase 6 to analyze individual facility locations based on essential climate variables and climate stressors. We quantified and tabulated relative risk due to individual climate stressors and statistics for all facilities evaluated and ranked them from highest to lowest to support prioritization of risk mitigation actions. To ensure the client could quickly access meaningful and relevant information, Woodard & Curran developed a data visualization dashboard with geo-referenced site locations and interfaces to the risk rankings.

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Satisfied with the report and interface our team created, the client requested further assessment of its 10 highest-risk sites. Woodard & Curran performed refined vulnerability assessment using climate risk engine tools and downscaled climate model datasets, and leveraging information gathered to propose a resilience strategy for each targeted facility.