Insurance group Howden has launched a digital innovation hub to help asset owners manage risk and increase climate resilience, supporting strategic decisions and the energy transition. Using Microsoft cloud services, the Howden Resilience Laboratory will process large volumes of complex environmental, societal and financial data, enabling clients to model scenarios and assess the impact of physical climate risks on real assets – thereby increasing their resilience and optimising decision-making. The solution was built in accordance with the Physical Climate Risk Assessment Methodology (PCRAM) curated by the Institutional Investors Group on Climate Change (IIGCC), and is the first to report on financial metrics such as cashflow impacts, taking climate risk assessment to “new levels”, Howden claims. “By streamlining the process, the [laboratory’s] application of PCRAM offers the opportunity to broaden its use across sectors, providing insurers and investors with a practical framework to incorporate climate resilience into their decision-making,” said Mahesh Roy, Investor Strategies Programme Director at the IIGCC. “This consistent approach not only manages risks but also enhances asset value over time, ensuring long-term stability and unlocking opportunities for more resilient investments.” Using industry research and partnering with data and modelling experts, as well as the Microsoft Planetary Computer, the laboratory will offer: advanced climate risk-modelling; bespoke strategic scenario-planning; optimised risk transfer solutions; and quantified financial impact of resilience investments. Howden and Microsoft will showcase an automated modelling approach at Climate Week NYC 2024, designed to give real-asset investors a pre-investment understanding of the impact of physical climate risks.
