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Welcome to the Climate Risk Wiki!
"On a mission to make the best climate risk data, analysis, and tools available for all"
UW Climate Risk Lab
The UW Climate Risk Lab (CRL) is a multidisciplinary research and innovation center based at the University of Washington Foster School of Business in the Department of Finance & Business Economics. Established in 2022, it advances data and technology solutions to issues in climate-related financial risk for corporate and government decision-makers. Phillip Bruner, co-founder of the CRL, currently serves as its Executive Director.
The CRL brings together academics and professionals in climate finance, risk management, business analytics, data engineering, computer science, atmospheric sciences, supply chains management, information systems and AI. It collaborates with several initiatives within the University of Washington (UW), which include the Buerk Center for Entrepreneurship, Clean Energy Institute, Creative Destruction Lab, eSciences Institute and Urban Infrastructure Lab. Its external partners include: the Duke Energy Data Analytics Lab, the Pacific Northwest Mission Accelerator Center, and Washington Maritime Blue.
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Climate change is already impacting the Earth dramatically[1], and the continued rise in greenhouse gas emissions will cause further warming of the planet, leading to significant socio-economic consequences. These impacts pose substantial risks to businesses, particularly those in vulnerable industries, affecting their credit profiles, share prices, and overall financial stability.
While the general understanding that climate change poses risks is widely accepted, it is not enough for lenders, investors, or regulators to act effectively without a clearer definition of the specific financial risks. These risks need to be quantified in terms of their scope, timing, and probability of occurrence. Identifying and understanding climate-related financial risks early on is critical, as they can lead to reduced asset utilization or valuation, decreased income, and lower profit margins. These financial impacts can translate into increased credit risk, influencing lenders' decisions and reshaping the financial profiles of affected industries.[2]
Data
The risk of climate change impacts results from dynamic interactions among climate-related hazards, the exposure and vulnerability of affected systems, and the mechanisms through which the risks manifest at a financial or macroeconomic level (Figure 2).[4]
The data needed for climate risk assessment is therefore organized into four broad categories:
- Climate hazard data: data describing physical and transition risk drivers, needed to translate climate risk drivers into economic risk factors (ie climate-adjusted economic risk factors)[5]
- Exposure data: data describing the vulnerability of exposures, linking climate-adjusted economic risk factors to exposures;
- Vulnerability data:
- Financial data: data needed to translate climate-adjusted economic risk into financial risk.
In this wiki, we present the needed data based on the two types of climate risks.
Source: IPCC AR6 WG2
References
- ↑ IPCC, 2023: Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, H. Lee and J. Romero (eds.)]. IPCC, Geneva, Switzerland, pp. 35-115, doi: 10.59327/IPCC/AR6-9789291691647.
- ↑ Imperial College Business School Center for Climate Finance & Investment (February 2022). “What is Climate Risk? A Field Guide for Investors, Lenders, and Regulators.” Available at: https://imperialcollegelondon.app.box.com/s/te5eahz3x47q93vufwwu3ntmf5rxecxs
- ↑ Taskforce on Climate-Related Financial Disclosures (June 2017). “Recommendations of the Taskforce on Climate-related Financial Disclosures: Final Report.” Available at: https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf
- ↑ Bavandi,Antoine; Berrais, Dorra; Dolk,Michaela Mei; Mahul,Olivier. Physical Climate Risk Assessment : Practical Lessons for the Development of Climate Scenarios with Extreme Weather Events from Emerging Markets and Developing Economies - Technical Document (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/099657511082325958/IDU0004b1eec0d7f304e7c0967305183f75f92a2
- ↑ https://app.paperpile.com/view/?id=191ebabf-a991-4576-9d3f-e6306318453d