Climate change analytics tool launched

JBA Risk Management has launched Climate Change Analytics; a data suite developed to help banks, lenders, investors, and the wider global financial sector understand the potential long-term impacts of climate change and to meet regulatory requirements.

Lenders and asset managers can use the data for property screening, regulatory stress testing, impairment charge assessment, portfolio management, and to better understand potential long-term property devaluation due to climate change. The data is available in a format that can be easily applied to in-house data at property-level for high resolution flood risk analysis.

Robert Stevens, head of Property Risk at Nationwide Building Society said: “JBA’s data effectively identifies which locations in the UK are at risk of flooding, which allows us to make upfront decisions on new mortgage originations to inform our long-term risk management.

“The introduction of Climate Change Analytics demonstrates a real step forward in applying this knowledge to future flooding. This is helping us to manage our portfolio and plan for future climate changes over the term of a mortgage.”

According to JBA, the data suite includes the full range of Representative Concentration Pathways (RCP) climate scenarios and represents every five-year time period from 2025 until the end of the century.

“We’ve combined our extensive flood science expertise with the insights learned from our experience in global re/insurance and our long-standing relationships with the UK banking sector,” said Vanessa Balmbra, Property and Financial Sector specialist at JBA. “We’re confident this resultant data will help global organisations plan for their future and understand possible flood risk under different climate scenarios.”

The financial services sector is expected to come under increasing regulatory pressure where climate change is concerned. It was identified as a key new direction for research in the 2020 Bank of England Agenda for Research; there was a climate change component to the 2019 Insurance Stress Test, and there is anticipation of possible new regulatory requirements and further climate change stress testing for the sector.

The data suite “can be easily adapted to meet the specific needs of international banks, lenders and asset managers,” added Balmbra. “Giving a long-term perspective on the potential impacts of climate change under a range of possible future climate scenarios, the data helps banks, lenders and the wider financial sector to analyse the scale of the climate change challenge.”