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Welcome to UW Climate Risk Lab Wiki,

the place for 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.

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.

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History

The CRL originated in 2022 with a grant from the Office of UW President

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Climate-related Financial Risk

What is climate risk?

Climate risk is the potential for negative consequences for human or ecological systems from the impacts of climate change. It refers to risk assessments based on formal analysis of the consequences, likelihoods and responses to these impacts and how societal constraints shape adaptation options. The science also recognizes different values and preferences around risk, and the importance of risk perception.

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Common approaches to risk assessment and risk management strategies based on natural hazards have been applied to climate change impacts although there are distinct differences. Based on a climate system that is no longer staying within a stationary range of extremes, climate change impacts are anticipated to increase for the coming decades. Ongoing changes in the climate system complicate assessing risks. Applying current knowledge to understand climate risk is further complicated due to substantial differences in regional climate projections. There is also an expanding number of climate model results, and the need to select a useful set of future climate change scenarios in the assessments.

The Intergovernmental Panel on Climate Change (IPCC) assessment framework is based on the understanding that climate risk emerges from the interaction of three risk factors: hazards, vulnerability and exposure. The IPCC summarizes published research on climate risk evaluations. International and research communities have been working on various approaches to climate risk management including climate risk insurance.

What is climate-related financial risk?

Climate change is a medium- to long-term trend that is expected to have significant financial impacts on companies in affected industries, including on their credit profiles and/or share prices. However, this knowledge is not particularly helpful for lenders, investors, or regulators unless these climate-related financial risks can be further defined in terms of their scope and, more importantly, their timing and likelihood. It is necessary to identify climate risks to industries before they cause reductions in asset utilization or valuation, reduced income and margins, or other financial impacts—changes that translate into credit risk and influence lenders’ decisions about financial profiles.

Climate-related financial risk categories

There are two categories of climate-related financial risk, according to the Taskforce on Climate-Related Financial Disclosures (TCFD):

• Transition Risks: Risks related to the transition to a lower-carbon economy. (Read more ...)
• Physical Risks: Risks related to the physical impacts of climate change. (Read more ...)

Climate-Related Risks, Opportunities, and Financial Impact

Source: Recommendations of the Task Force on Climate-related Financial Disclosures

Data

References