Frequently Asked Questions

Climate Risk relates to the potential impact of climate change on the global annual economic output. The warming planet is a key risk to global financial institutes, with a need to understand the direct risks climate change poses for clients and portfolios to safeguard financial businesses. Moreover, indirect impacts of climate change on the financial sector can occur through regulatory policies organisations must comply with.

The risks of climate change can be divided into two categories: Physical Risks and Transition Risks. These two types of risk can impact financial stability in different ways.

Physical Risks refer to the physical impacts of climate change in the form of natural disasters and damage to homes, business disruption and loss of lives. Physical Risks could be both acute and chronic.

• An increase in the frequency and severity of extreme weather events drives acute physical risks. Examples are storms, flood, wildfire among others.
• Chronic physical risks are related to more progressive and longer-term shifts in climate patterns over time. Examples are rising average temperatures and ocean acidification.

Transition Risks refer to societal changes arising from a low-carbon economic transition. This includes clean energy technological advancements, shifts in consumer sentiment and investor sentiment, and climate policy interventions that can have risky carbon-intensive financial exposures. For example, regulators could promote emission reductions through new policies, while investors challenge firms that are not factoring the effects of climate change into their business decision-making.

Yes. With our data, you'll have a portfolio and asset-level view of climate risk across various asset classes and functions suitable for internal risk reporting. Running a risk report would take you less than five minutes and is entirely self-service.

Yes, our granular climate data can be used for effective regulatory compliance and alignment with the evolving landscape - for example:

• EU Taxonomy (and recently deprecated TCFD).
• ECB C&E 2020 Guide.
• ECL / ICAAP / IASB / IFRS S2.
• GRESB / CRREM / Article 8/9.
• Stress testing/scenario analysis requirements.
• Annual Reports.

Spectra boasts one of the most advanced and friendly user interfaces and is capable of assessing and analysing entire portfolios. It's designed to give you the information that matters to you; our data can be extracted from our climate risk engine via:

• .csv data files: This method boasts comprehensive data and asset-level with losses detailed - right down to hazard type per asset.
• Business Intelligence Platforms: Tableau, Power BI Enterprise, QlikView, etc.
• Enterprise API: Get practically unlimited data you want right into your existing in-house platform(s).

Based on the UNFCCC, climate adaptation refers to making changes to ecological, social, or economic systems to prepare them to deal with the current impacts of climate change.

Climate adaptation is important as it represents actions we can take now to lessen the negative effects of climate change. 

In the context of the built environment (real estate), climate adaptation refers to investments that can lower the physical damage from extreme weather events.

For example, an asset facing high risk from North Atlantic Storms or Tropical Cyclones wind (Windstorms, Hurricanes) could benefit from roof bracing or storm shutters as adaptation measures.

With Adapt, you can see the cost of implementing these measures, how well they protect against risk, and the resulting damage prevented (loss savings).

Using this data, we calculate the return on investment (ROI) of the adaptation.

Adapt is a SaaS software, available as web application, that allows you to discover what adaptation measures are possible for a given asset, showing implementation costs and ROI.

The tool helps with planning for adaptation measures, as well as when evaluating an asset as part of an investment cycle.

It effectively serves as an alternative to on-site assessments, saving time and resources.

• You can test adaptation measures for any asset in our 1.7billion library.
• Regions covered are Europe, North America and APAC.
• Warming scenarios available are RCP 2.6, 4.5, 6.0 & 8.5 + SSPs.

We have 21 climate adaptation measures available for each asset, relating to the various extreme weather hazards.

The adaptation measures are prioritised based on the hazards posing the highest financial risk and adaptation ROI.

Some of the costs estimated are based on assumptions, e.g. we assume flood defences are placed around the asset perimeter. These assumptions can be changed by the user.

Majority of the costs are based on UK prices of implementation.