Mind the physical-risk due diligence gap warns flood scientist, JBA Risk Management

A failure to use good quality data and sophisticated climate change intelligence to understand the impact of flood on physical assets could be putting investors’ portfolios at risk, warns flood science specialist JBA Risk Management. The warning comes as companies and organisations around the world gear up to meet new annual reporting standards from 1st January this year under the International Sustainability Standards Board’s (ISSB) IFRS S2 climate-related disclosures. 

The costs of flooding are immense. From 2018-2022 alone worldwide losses from flooding were estimated at US$300bn, of which only 15% ($45bn) was insured. And as the incidence of flooding rises as a result of climate change, the associated costs to both businesses and public bodies will also only continue to increase.

Assessing the full potential impact of flood on a business portfolio however entails not only understanding the physical damage but the knock-on impact of disruption on day-to-day operations, cash flow and the balance sheet. And whilst identifying and assessing the risks to physical assets in the short, medium, and long-term is an imperative for those reporting to International Financial Reporting Standards, it is also essential for any investor or lender looking to protect and grow their assets.

As the world’s leading provider of flood risk intelligence to the financial and insurance sectors, governments, and NGOs, JBA’s high-quality data, analytical tools and expertise can help ensure investment managers assess the physical flood risk on their portfolios down to an individual asset level, supporting informed investment and divestment decisions.

JBA’s flood risk intelligence and expertise can help investors navigate through, and understand the full impact of, climate change on their physical assets to ensure there are no unquantified risks in their portfolios. We can also help them to understand, assess, and even support the adaptation, mitigation, or transition of those risks. Having a clear understanding of the likelihood of flood risk across an investment portfolio not only informs educated decisions about where to place long-term investment but also highlights opportunities that might previously have been dismissed as too risky. After all, the more precise the data and insights used the more indicative of the potential financial impact, including that on production, revenue generation and cash-flow. And the lower the quality of the data used, the greater the potential of missing the risk.
Peter Brazil, Business Development Manager, Investment Markets, JBA Risk Management

JBA’s flood risk experts use hydrological mapping, climate science and location-level analytics for every location in the world to produce flood data detailing complex insight – all in usable formats - to help businesses gain an informed understanding of the potential impact on their physical assets. From hazard maps that can deliver multi-layered detail for a 5 metre squared urban area, to understanding the potential impact of an entire flood event, JBA’s flood risk intelligence is underpinned by robust science. JBA’s climate change data for example offers a range of SSP (Shared Socioeconomic Pathways), the family of scenarios used in state-of-the-art global climate models to produce (CMIP6) simulations in support of the most recent IPCC report.


Munich Re. Flood Risks On The Rise. Available at https://www.munichre.com/en/risks/natural-disasters/floods.html

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