The significant impact that extreme weather events have on the financial, insurance, agriculture, and insurance sectors is no longer news, and companies now prioritize physical risk and transition risk in addition to macroeconomic risk when managing their risk exposure. In light of climate change, it is important that companies develop their risk management tools, incorporating climate risk and existing scenario models for their analysis. However, there is no specific model that is widely adopted across sectors to perform scenario analysis related to climate change. With that in mind, the goal of this project is to investigate and create a model that reflects expert knowledge, research, and data in a systematic manner. The first step is to identify the sector of interest, for example, the agriculture sector and the crop of interest, or claim modeling for insurance companies, followed by the weather variables and the geographical region. Then we carried out a literature review by learning from existing literature on papers that referenced the impact of climate change on the subject of interest. Further, the different approaches and methodologies that are widely adopted across industries to perform scenario analysis related to climate change will be explored.
Supervisor: Tolulope Fadina
February 6, 2025