Put seven leading physical risk vendors to the test on a single flood-prone stretch of road outside Paris, and here’s what you get: agreement on exactly one obvious hotspot, and violent disagreement everywhere else.
It’s one of several somewhat awkward findings in a new report from the Investor Leadership Network — a coalition of institutional investors managing some US$10trn in assets — and it’s the jumping-off point for this episode’s deep dive into whether financial institutions can actually trust the climate risk data they're paying for.
Nik Steinberg, a climate risk and adaptation expert at Vector Climate Group and author of the report, and Daisy Streatfeild, Chief Sustainability Officer at asset manager Ninety One, join to dissect the physical risk vendor market and clarify what makes a provider’s outputs credible, reliable, and — most importantly — useful to investors.
Along the way, Nik and Daisy explain why vendor disagreement isn’t automatically a red flag, and why it’s important for firms to understand whether differences in model outputs are due to irreducible scientific uncertainty or footloose methodologies.
They also highlight a glaring blind spot across the physical risk data space: vendors neglecting cascading risk and system-level adaptation measures in their analyses.
For the makers — and users — of physical risk data, this episode promises to shake-up the assumptions underlying an increasingly crowded corner of the adaptech market.
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Louie Woodall
Editor
