PART four OF OUR 10TH ANNIVERSARY INTERVIEW SERIES
JBA is investing heavily in both technology and methodology to drive forward understanding of the impact of global climate change on the insurance and financial sectors, explains Dr Emma Raven, Climate Change Lead at JBA Risk Management.
Climate change is now, finally, at the very top of both the business and political world’s agendas and the timing could not be more pertinent as we work towards launching our Global Climate Change Flood Model in 2022.
Incorporating climate change into our global models and methodology has been a real learning curve.
Whilst we developed and launched the UK’s first Climate Change Flood Model in 2018, that work benefited from two major pillars.
Firstly, the quality of our existing flood maps and models provided us with a solid baseline from which to build projections. And secondly, the UK Government’s Climate Projections and Climate Change Risk Assessment (UKCP09 and the UK CCRA 2017) provided us with useable sets of climate change data and pathways agreed by the scientific community.
Mirroring this work on a global scale presents a greater challenge. Whilst we already have high resolution global flood maps and models, providing the essential baseline for present day global flood risk, we don’t necessarily have the same “government-approved” climate change data to plug into.
Instead, we’ve had to develop these datasets ourselves, utilising global climate model data to adjust the hydrology that drives our flood models.
This is a complex process, as there is no one view of how the climate will change or over what period, with projections varying from the most pessimistic Representative Concentration Pathway (concentrations of greenhouse gases in the atmosphere) at RCP8.5 to the most optimistic at RCP2.6.
This variation in outlooks and data also makes the traditional approach of building a model for each set of scenarios just not practicable.
And this is why we have invested not only in our people – with me now heading up a team of six dedicated to climate change – but also in developing our own modelling technology.
This innovative and powerful technology enables the building of models “on the fly”, as needed, and will enable us to generate models and data more easily for a range of climate scenarios and time horizons, and to update the models so they keep up with the pace of climate science and changing future views.
And just as we are investing in understanding the impacts of climate change, so are our clients.
Insurance market interest has grown exponentially in the last 12 months, stimulated in the UK by the Bank of England stress tests, a regulatory approach also due to be adopted in Europe in March 2022. Interest has also been growing rapidly in the lending and investment sectors.
Climate change is a huge learning curve for our clients, and many of those subscribing to our Climate Change Analytics and UK Climate Change Flood Model are increasingly also calling on us to help them work out what the findings mean for their businesses and how they can respond. Some are also already moving towards allocating individuals or teams to take responsibility for their climate change work.
There is much that could change over the next decade in terms of climate change, and innovation plays a major part of potential change when it comes to emissions. Innovation is also part of the JBA DNA – with science at the very core of everything we do.
To this end, whilst we work towards releasing our Global Climate Change Flood Model next year, we continue looking forwards to what clients may need next.
To date we are focused on physical hazard – but there will be a need in future to understand how investment in defences, changes in population growth and other variables outside of physical risk will impact future risk assessment.
The world is at an important juncture. I’ve been researching climate change, extremes, and flood risk for my whole career and it feels like the world has finally woken up and is now recognising the serious risks posed as our climate changes.
We must all play our part in terms of reducing our personal and companies’ carbon footprints, but the financial service industry must also be as prepared as they can be for the financial impact of climate change – and that’s where JBA can make a real difference.
This is part four of a series of interviews with the JBA team over the coming weeks. Read the rest of the series here.
For more information on JBA's work, get in touch with the team using the form below.
