What could have happened if events had been worse?
Natural disasters caused by climate change, such as floods and hurricanes, negatively impact local funding and investors’ confidence in a region. Insurance costs and market conditions are determined globally. As a result, the EU finance sector and EU businesses are exposed to potential losses via their foreign investments – meaning a shock in one region can imply direct and indirect risk responsibilities for the private and public sectors in Europe. We will assess risks and liabilities for the EU public sector as well as for European insurers and reinsurers.
We will construct high-risk storylines based on historical tracks and data mining – for instance, examining recent years of probabilistic weather forecast archives – and will develop storylines that are relevant to stakeholders’ needs.
We will stress-test public and private finance in terms of climate-related risks and shocks to:
- insured capital and assets
- portfolio investments
- foreign direct investments worldwide
- public investments in EU outermost regions and overseas territories
The storylines will also construct a framework to identify key principles in tracing public and private finance liabilities that result from disaster events like those in the storylines.
Find out more about how Climate shocks can impact the finance sector in our interview with experts Stefan Hochrainer-Stigler and Reinhard Mechler from Risk and Resilience (RISK) program at IIASA.