Physical Climate Analytics

Our expert team, bringing together climate science, financial risk modelling and data analytics, has developed a tool that provides our clients with an efficient approach to identify physical risk hotspots. Physical Climate Analytics allows physical risk to be assessed across the value chain and / or portfolio, in the short-, medium- and long-term, based on the latest climate scenarios.

PwC UK's Physical Climate Analytics, powered by Jupiter Intelligence™, a best-in-class physical risk data provider, supports analysis across any sector and geography with a 90m grid granularity.

Importantly, our tool is transparent, with the uncertainties of the underlying metrics and approach documentation accessible to allow our clients to integrate the outputs into well-informed strategy and capital planning, increasing stakeholder confidence in business resilience and risk management.

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Why is physical climate scenario analysis important?

With some level of climate change already locked in, it is becoming increasingly important for companies to understand what might happen to their business from a physical risk perspective. This is further driven by disclosure, recent policy commitments, regulatory and investor pressures.

Despite this, the most recent (October 2021) status report from the Task Force on Climate-related Financial Disclosures (TCFD) found that most of the 1,600 reviewed companies continue to struggle to quantify the financial impact of climate change and to source the data they need to undertake scenario analysis. Equally, sourcing and interpreting climate model data is complex and requires significant processing to generate high-quality, granular physical risk data. Our Physical Climate Analytics tool can help break through these challenges.

How we can help with PwC UK’s Physical Climate Analytics, powered by Jupiter Intelligence™

PwC UK’s climate risk tool, powered by Jupiter Intelligence™, a best-in-class physical risk data provider, supports analysis across any sector and geography with a 90m grid granularity. Our tool provides an efficient approach to identify physical risk hotspots across your value chain and / or portfolio, in the short-, medium- and long-term, based on the latest climate scenarios. As the uncertainties of the underlying metrics are accessible within the tool, the data can be integrated into well-informed strategy and capital planning, increasing stakeholder confidence in business resilience and risk management.

  • How can I quickly get a data rich view to identify where the physical risk “hot spots” within my value chain and / or portfolio are across different perils, scenarios and timeframes?
  • What is the change in a physical risk, across different hazards, metrics and return periods for a particular location / asset?
  • What is the associated financial impact (e.g. changes to cost, revenue, asset value) due to damage and / or business disruption?
  • Where do I need to focus my adaptation and mitigation actions, and what does this mean for the strategic and risk management decisions for my business?
Example dashboard output using PwC UK’s Physical Climate Risk Tool

Indicative output: please note that the data in this image is for display purposes only

A transparent and efficient approach to analysing financial physical risk

Data collection

By first helping you select your most material and strategic assets, we can assist in mapping out your sites based on their latitude and longitude coordinates, classification of sites and insured value of assets.

 

Data run through Jupiter ClimateScore™ Global

Your sites are run through the Jupiter ClimateScore™ Global model to map the risk to your assets, including uncertainty bounds, out to 2100, under three climate scenarios under seven hazard groups.

 

Rich raw data output

Through our automated Alteryx™ flow, we transform the risk results and risk scores into a rich data format that can be integrated into your systems and used for financial quantification.

 

Financial quantification

Using catastrophe-modelling techniques, we use the risk results to quantify the loss to your business that physical climate change can pose under damage and disruption events.

These results can inform your TCFD statements and be integrated into your annual reporting.

Hotspot visualisation and model output of financial impact to support risk integration

We visualise your risk results, risk scores and financial impacts in either Tableau or Power BI to map out where your risks lie, where your risks are increasing and where the most material financial impact is.

We then hold training sessions and hand over the risk dashboards to allow you to integrate them into strategic planning, risk analysis and business continuity plans.

 

Why powered by Jupiter Intelligence™?

Jupiter Intelligence™ is a global leader in physical climate risk analytics. Powered by proprietary cloud infrastructure and advanced machine learning, it brings together global climate models, historical datasets and high-resolution topographical models.

Jupiter’s data has been developed using the 6th iteration of the Coupled Model Intercomparison Project (CMIP6) models and the IPCC AR6 scenarios. The data allows for physical climate risk to be quantified anywhere on the planet, every 5 years from the present to 2100.

Hazard metrics for flood and wind are then passed to a vulnerability and financial loss module, from which Jupiter produces Average Annual Loss and damage and disruption indicators due to these extreme events. We integrate these indicators within client business data to calculate the financial impact to the business from physical risk. The data is updated periodically throughout the year giving our clients access to the most relevant new metrics.

Explore each peril below

Geometric image

Hover-over or click on any of the items in the circle, use arrow keys when focused on the circle or tab key to loop through the details.

Flood depth of water

  • Flood depth of water across multiple return periods
  • Percentage of the central square flooded across multiple return periods
  • Fraction of building, contents and inventory damaged by flood events
  • Annual average loss to building, contents and inventory
  • Number of days of business interruption
  • Maximum tidal depth in metres
  • Annual average damage

Extreme rainfall

  • Maximum daily precipitation across multiple return periods

Extreme wind speeds

  • Maximum wind speed at multiple return periods
  • Fraction of building, contents and inventory damaged by extreme wind events
  • Annual average loss to building, contents and inventory
  • Number of days of business interruption
  • Annual average damage

Extreme heat

  • Days per year exceeding 35°C, 38°C and the historical 99th percentile
  • Heating and cooling degree days
  • Days exceeding high (32°C) and dangerously high (35°C) Wet-Bulb Globe Temperature
  • Absolute heat wave where temperature is between 24°C and 35°C over a 3-day period
  • Relative heat wave where the maximum temperature over a 3-day period exceeds local historic 95th percentile

Extreme cold

  • Days exceeding -5℃ and the historic 10th percentile
  • Sustained periods of extreme low temperatures

Hail and thunderstorm probability

  • Number of days per year where large hail (>2 in / 5 cm in diameter) is possible
  • Number of days per year where environmental conditions are conducive to severe thunderstorm formation

Drought frequency

  • Months per year where the rolling 3 or 6-month average of Standardized Precipitation Evapotranspiration Index (SPEI) is below -2 indicating extreme drought
  • Local water stress (LWS), the ratio between water demand and water supply at the local level
  • Total water stress (TWS), the ratio between water demand and supply including upstream water stress

Wildfire risk

  • The annual number of wildfires, which ignite and grow to detectable size, that are expected in a 1 square km grid cell

The value we bring to our clients

We have been supporting our clients across the world in assessing their physical risk exposure. Our team of experienced experts have been working with corporates, real assets, financial services and private equity companies to understand the risk within their operations, the value chain and/or portfolio, across all sectors and geographies. Through translating the complex outputs and associated uncertainty within our tool, these projects have enabled our clients to understand the risk hotspots and consequently enhance business resilience and adaptation strategies needed for those high physical risk areas identified.

Quantifying the physical effects of climate change for a FTSE100 telecoms company

Using our tool we quantified the physical climate risk for key operations and supply chain infrastructure for our client, considering the potential impact of extreme weather events on buildings and high value assets such as telecommunication infrastructure and exchanges. The client used the outputs to consider the strategic lens to climate risk, understanding the key climate risks to their business, identifying the material locations and prioritising adaptation strategies.

Realising the impact of climate change on a UK Financial services’ mortgage portfolio

We assessed physical climate risk across the mortgage portfolio for a financial services client, through determining the potential change in valuation of an asset, based on physical climate risk financial impact. This analysis enhanced the client’s responses to meet the requirements of the Prudential Regulatory Authority and the Climate Biennial Exploratory Scenario.

Understanding the mitigation and adaptation steps for a Global Energy Technology Company to combat climate change

A core part of transitioning to Net Zero for our client was understanding the physical climate risk exposure of the current portfolio of assets. We identified climate risk hotspots for our client’s operations, showing areas where physical risks would dramatically increase, as well as areas that remain more constant. From our financial analysis on damage and disruption across our client’s core high risk sites they were able to understand where priority mitigation action was needed and where site relocation would need to occur. We integrated the results into their risk management processes and ongoing business strategy.

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Contact us

Ian Milborrow

Ian Milborrow

Partner, Climate Finance and Net Zero, PwC United Kingdom

Tel: +44 (0)7738 845072

Rachel Watson

Rachel Watson

Director, Sustainability, PwC United Kingdom

Tel: +44 (0)7710 396679

Josie Narramore

Josie Narramore

Manager, PwC United Kingdom

Tel: +44 (0)7841 074063

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