Bloomberg and Riskthinking.AI have introduced innovative physical risk indicators, available on the Bloomberg Terminal and through the Bloomberg Data License. These indicators are the first of their kind, encompassing all climate scenarios validated by the Intergovernmental Panel on Climate Change (IPCC). By combining Bloomberg’s extensive dataset on over 1 million physical assets with Riskthinking.AI’s comprehensive global climate projections and their unique methodology, these indicators offer Bloomberg users a robust tool for evaluating their exposure to climate-related hazards such as floods, droughts, wildfires, and other vulnerabilities.
Given the increasing concern among investors and regulatory bodies about the impact of extreme weather events, it has become imperative to disclose climate-related risks. Reporting frameworks like the Corporate Sustainability Reporting Directive (CSRD) in Europe, Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, and IFRS Sustainability Disclosure Standards in various jurisdictions are emphasizing the importance of climate risk disclosure.
To facilitate better comprehension of climate-related risk exposure for investors and companies, Riskthinking.AI utilizes Bloomberg’s physical asset data for nearly 50,000 firms, covering a wide range of facilities such as manufacturing sites, energy plants, mining operations, office buildings, and retail sites. Riskthinking.AI employs a granular, bottom-up methodology, assessing the climate conditions at each asset location. This approach allows users to delve into the specific assets of a parent company, enabling in-depth analysis of specific threats. These indicators can also be used in conjunction with Bloomberg’s global supply chain data to identify physical vulnerabilities in key suppliers that might adversely affect a company’s operations.
What sets these indicators apart is their consideration of every IPCC-endorsed climate scenario, taking a truly stochastic approach that encompasses a wide range of potential future outcomes, including rare, extreme events that other models might overlook. The indicators provide a straightforward representation of a company’s physical risk exposure level, grading it on a scale of 0 to 100, with classifications of high, moderate, and low risk, along with forward-looking projections up to 2050. Users have access to detailed documentation explaining the underlying calculations, allowing them to reference these indicators for reporting climate-related risks in compliance with the CSRD, TCFD recommendations, and IFRS Sustainability Disclosure Standards.
