Learn more about Moody’s Climate Pathways solution that offers a specialized scenario modeling solution for insurers, asset managers, and pensions funds enabling quick assessment of the financial impact of climate risks.
There are growing pressures and sound business reasons for life and property and casualty (P&C) (re)insurers to address the risks and opportunities arising from climate change.
Climate change risk assessment is a new endeavor for many insurers, requiring new datasets, new expertise, and new approaches to operationalizing the insights from our analytics.
Moody’s partners with insurers to help them get started and progress over time to more quantitative climate change risk analytics to meet their regulators’ expectations.
We help insurers understand the financial impact of material climate risks covering both sides of the balance sheet, including market, credit, and catastrophe risks, and we have the required building blocks in place to make sure existing risk practices are fully climate adjusted.
Moody’s solutions assist insurers in shaping strategy, setting risk appetite, and testing business resilience through:
Consistent scenario-building across both sides of the balance sheet under different Representative Concentration Pathways (RCPs) for physical risk and Network for the Greening of the Financial System scenarios (NGFS) for transition risks.
Internal and regulatory scenario exercises with shorter time frames to act as a stress test on an insurer’s capital and business resilience as well as to update the Own Risk and Solvency Assessment (ORSA) to capture climate change impacts on insurance businesses. This includes regulatory stress tests with both static and dynamic balance sheets.
Medium- and longer-term what-if exercises under different scenarios to inform sustainable business strategy.
Sensitivity analysis highlighting how relevant climate shocks impact risk exposures, strategies, and financial positions. Apply different scenarios or assumptions to understand the potential worst-case effects.
There are increasing demands from insurers’ regulators to integrate new climate risk tools and methodologies into existing risk management frameworks.
With Moody’s, insurers’ actuarial, risk management, investment, and underwriting functions can rethink risk and ensure existing practices are climate-adjusted to mitigate, adapt, and transition toward net zero.
Our solutions can help you:
Assess investment and underwriting portfolios’ vulnerability to climate risk based on climate-adjusted risk metrics and forward-looking metrics.
Align investment and underwriting portfolio strategies with revised risk appetites and transition targets.
Calculate capital resource allocation based on strategic resource allocation using revised capital market assumptions, asset and liability management (ALM), and risk capital requirements, as well as ensuring adequate reinsurance coverage.
Achieve consistency across both sides of the balance sheet for ALM and ORSA purposes.
Set portfolio decarbonization targets and engagement strategies using company transition risk assessments that cover carbon footprints, stranded assets, brown-share assessments, and temperature alignment data.
Calculate or estimate carbon footprints and emissions for real estate, offering detailed (bottom-up) insights that can be compiled at the portfolio level.
Set building emission benchmarks toward net zero using Carbon Risk Real Estate Monitor decarbonization pathways or a proprietary one. You can also utilize a library of measures for energy efficiency and decarbonization, estimating the cost of upgrades to meet these targets.
Effective monitoring and reporting on climate risk are vital for insurers across a variety of areas, from regulatory compliance to strategic planning and financial stability.
New comprehensive climate risk metrics and targets for internal and external reporting, including ORSA and new public financial disclosure standards including ISSB, CSRD, and more
Impact of physical and transition risks on the financial position over the short, medium, and long term
Climate resilience of an insurer’s strategy when facing climate-related changes
Probable maximum loss of insured products from weather-related natural catastrophes
Total amount of monetary losses attributable to insurance payouts from natural catastrophes
Scope 1, 2, and 3 greenhouse gas financed and insurance-associated emissions following Partnership for Carbon Accounting Financials (PCAF) protocols
Monitor and report on the effectiveness of risk management strategy through the ORSA
Monitoring performance versus risk limits
Active monitoring of macro-economic impacts from climate change, particularly interest rate and inflation risk exposures
Monitoring the impacts of physical risk on mortality and morbidity patterns, supplemented by continuous monitoring of long-term trends
Moody’s Climate Change Models extend our industry-leading, comprehensive catastrophe models to capture the near- and long-term climate change risk outlook.
They empower you to address the challenges climate change poses so you can improve your risk selection, optimize your portfolio, and embed your view of climate change risk into your overall view of catastrophe risk.
We help insurers understand the financial impact of material climate risks covering both sides of the balance sheet, including market, credit, and catastrophe risks, and we have the required building blocks in place to make sure existing risk practices are fully climate adjusted.
Moody’s solutions assist insurers in shaping strategy, setting risk appetite, and testing business resilience through:
Consistent scenario-building across both sides of the balance sheet under different Representative Concentration Pathways (RCPs) for physical risk and Network for the Greening of the Financial System scenarios (NGFS) for transition risks.
Internal and regulatory scenario exercises with shorter time frames to act as a stress test on an insurer’s capital and business resilience as well as to update the Own Risk and Solvency Assessment (ORSA) to capture climate change impacts on insurance businesses. This includes regulatory stress tests with both static and dynamic balance sheets.
Medium- and longer-term what-if exercises under different scenarios to inform sustainable business strategy.
Sensitivity analysis highlighting how relevant climate shocks impact risk exposures, strategies, and financial positions. Apply different scenarios or assumptions to understand the potential worst-case effects.
There are increasing demands from insurers’ regulators to integrate new climate risk tools and methodologies into existing risk management frameworks.
With Moody’s, insurers’ actuarial, risk management, investment, and underwriting functions can rethink risk and ensure existing practices are climate-adjusted to mitigate, adapt, and transition toward net zero.
Our solutions can help you:
Assess investment and underwriting portfolios’ vulnerability to climate risk based on climate-adjusted risk metrics and forward-looking metrics.
Align investment and underwriting portfolio strategies with revised risk appetites and transition targets.
Calculate capital resource allocation based on strategic resource allocation using revised capital market assumptions, asset and liability management (ALM), and risk capital requirements, as well as ensuring adequate reinsurance coverage.
Achieve consistency across both sides of the balance sheet for ALM and ORSA purposes.
Set portfolio decarbonization targets and engagement strategies using company transition risk assessments that cover carbon footprints, stranded assets, brown-share assessments, and temperature alignment data.
Calculate or estimate carbon footprints and emissions for real estate, offering detailed (bottom-up) insights that can be compiled at the portfolio level.
Set building emission benchmarks toward net zero using Carbon Risk Real Estate Monitor decarbonization pathways or a proprietary one. You can also utilize a library of measures for energy efficiency and decarbonization, estimating the cost of upgrades to meet these targets.
Effective monitoring and reporting on climate risk are vital for insurers across a variety of areas, from regulatory compliance to strategic planning and financial stability.
New comprehensive climate risk metrics and targets for internal and external reporting, including ORSA and new public financial disclosure standards including ISSB, CSRD, and more
Impact of physical and transition risks on the financial position over the short, medium, and long term
Climate resilience of an insurer’s strategy when facing climate-related changes
Probable maximum loss of insured products from weather-related natural catastrophes
Total amount of monetary losses attributable to insurance payouts from natural catastrophes
Scope 1, 2, and 3 greenhouse gas financed and insurance-associated emissions following Partnership for Carbon Accounting Financials (PCAF) protocols
Monitor and report on the effectiveness of risk management strategy through the ORSA
Monitoring performance versus risk limits
Active monitoring of macro-economic impacts from climate change, particularly interest rate and inflation risk exposures
Monitoring the impacts of physical risk on mortality and morbidity patterns, supplemented by continuous monitoring of long-term trends
Moody’s Climate Change Models extend our industry-leading, comprehensive catastrophe models to capture the near- and long-term climate change risk outlook.
They empower you to address the challenges climate change poses so you can improve your risk selection, optimize your portfolio, and embed your view of climate change risk into your overall view of catastrophe risk.
Learn more about Moody’s Climate Pathways solution that offers a specialized scenario modeling solution for insurers, asset managers, and pensions funds enabling quick assessment of the financial impact of climate risks.
Moody’s helps both P&C and life insurers assess climate risk impacts on their underwriting portfolios:
Understand, evaluate, and manage your climate change risk in multiple regions using a probabilistic modeling approach:
Gain a deeper understanding of climate change’s impact on specific perils.
Seamlessly adjust time horizons and RCPs to capture different climate change scenarios’ effects.
Leverage a proprietary industry and economic exposure database for more accurate and effective climate change analyses.
Utilize a full range of future climate scenarios based on robust climate change science and informed by data from the Intergovernmental Panel on Climate Change (IPCC).
Calculate insurance-associated emissions based on PCAF methodology to establish a baseline and a detailed understanding of the greenhouse gas emissions associated with an insurer’s underwriting portfolio.
Mortality and longevity modeling equips insurers with advanced insights to gauge climate change’s effects on mortality rates and life expectancy. Through analyzing historical data and predictive trends, insurers can adjust premiums, reserves, and risk mitigation strategies in response to climate-induced health risks. This not only helps with precise pricing and financial planning but also enhances insurers' capacity to foresee and adapt to the evolving landscape of climate risks.
Our solutions support both physical and transition risk modeling for multi-asset class portfolios, including equities, corporate and sovereign bonds, corporate real estate, structured products, and more.
Risk levels of hazards and damage such as floods, heat stress, wildfires, hurricanes, sea level rise, and water stress at different levels of granularity, including global and regional, sector, company, or individual location levels
Globally comparable hazard and impact scores to identify which climate hazards are material now or in the future and which location or aggregated segment carries high climate risk. You can assess the climate risk impact via the damage rate under different RCP scenarios
Climate-adjusted macro-economic forecasts with an 80-year horizon, fully aligned with NGFS scenarios
Calculate financed reported and estimated Scope 1-3 emissions based on PCAF methodology to establish a baseline.
Perform climate adjusted macro-economic forecasts with an 80-year horizon, fully aligned with NGFS scenarios
Moody’s top-down climate pathway scenario analysis enables insurers to analyze the financial impact of physical and transition risk from a macroeconomic view based on climate-conditioned financial variables at a global or sector level over multiple time horizons.
With flexibility to evaluate different scenario options, insurers can act quickly and confidently to select and make recommendations about the best choice of assumptions and scenarios to match their business profiles.
Moody’s supports “bottom-up” line-by-line assessment of the financial impact from physical and transition risks on credit risk, including commercial real estate, retail mortgages, and loans. These detailed credit risk projections can be aggregated to generate a portfolio view of climate-adjusted probability of default.
Gain a deeper understanding of climate change’s impact on specific perils.
Seamlessly adjust time horizons and Representative Concentration Pathways to capture the effects of different climate change scenarios.
Leverage a proprietary industry and economic exposure database for more accurate and effective climate change analyses.
Our models are informed by Intergovernmental Panel on Climate Change data for a full range of future climate change scenarios.
Moody’s helps both P&C and life insurers assess climate risk impacts on their underwriting portfolios:
Understand, evaluate, and manage your climate change risk in multiple regions using a probabilistic modeling approach:
Gain a deeper understanding of climate change’s impact on specific perils.
Seamlessly adjust time horizons and RCPs to capture different climate change scenarios’ effects.
Leverage a proprietary industry and economic exposure database for more accurate and effective climate change analyses.
Utilize a full range of future climate scenarios based on robust climate change science and informed by data from the Intergovernmental Panel on Climate Change (IPCC).
Calculate insurance-associated emissions based on PCAF methodology to establish a baseline and a detailed understanding of the greenhouse gas emissions associated with an insurer’s underwriting portfolio.
Mortality and longevity modeling equips insurers with advanced insights to gauge climate change’s effects on mortality rates and life expectancy. Through analyzing historical data and predictive trends, insurers can adjust premiums, reserves, and risk mitigation strategies in response to climate-induced health risks. This not only helps with precise pricing and financial planning but also enhances insurers' capacity to foresee and adapt to the evolving landscape of climate risks.
Our solutions support both physical and transition risk modeling for multi-asset class portfolios, including equities, corporate and sovereign bonds, corporate real estate, structured products, and more.
Risk levels of hazards and damage such as floods, heat stress, wildfires, hurricanes, sea level rise, and water stress at different levels of granularity, including global and regional, sector, company, or individual location levels
Globally comparable hazard and impact scores to identify which climate hazards are material now or in the future and which location or aggregated segment carries high climate risk. You can assess the climate risk impact via the damage rate under different RCP scenarios
Climate-adjusted macro-economic forecasts with an 80-year horizon, fully aligned with NGFS scenarios
Calculate financed reported and estimated Scope 1-3 emissions based on PCAF methodology to establish a baseline.
Perform climate adjusted macro-economic forecasts with an 80-year horizon, fully aligned with NGFS scenarios
Moody’s top-down climate pathway scenario analysis enables insurers to analyze the financial impact of physical and transition risk from a macroeconomic view based on climate-conditioned financial variables at a global or sector level over multiple time horizons.
With flexibility to evaluate different scenario options, insurers can act quickly and confidently to select and make recommendations about the best choice of assumptions and scenarios to match their business profiles.
Moody’s supports “bottom-up” line-by-line assessment of the financial impact from physical and transition risks on credit risk, including commercial real estate, retail mortgages, and loans. These detailed credit risk projections can be aggregated to generate a portfolio view of climate-adjusted probability of default.
Gain a deeper understanding of climate change’s impact on specific perils.
Seamlessly adjust time horizons and Representative Concentration Pathways to capture the effects of different climate change scenarios.
Leverage a proprietary industry and economic exposure database for more accurate and effective climate change analyses.
Our models are informed by Intergovernmental Panel on Climate Change data for a full range of future climate change scenarios.
Our podcast series is dedicated to understanding the generation, application, and interpretation of climate scenarios.
Our experts answer key questions such as how do climate scenarios differ from the scenarios that institutions normally use? What are the advantages of quantitative scenarios over narrative ones? What are the disadvantages or limitations that people should keep in mind?
Listen as our panelists discuss the sources of climate narratives, physical versus transition risks, NGFS scenarios, and more.
Our panelists discuss important aspects of NGFS scenarios, including their evolution as well as potential advantages and disadvantages.
Watch as we explore how we model major climate events, with a special focus on Hurricane Milton. Our experts will reveal impacts on commercial real estate exposures and show how proactive risk management can climate-proof credit portfolios.
Moody's
This paper discusses the ways standard climate scenarios, like those produced by the NGFS, can be used to create short-term stresses for financial markets.
Climate risk quantification is a fast-developing field. Financial institutions and regulators in many jurisdictions are trying to better understand their exposure to climate risks through climate scenario analysis.
Discover how climate scenario analysis can identify both risks and opportunities, enhancing business strategy and investments. Learn more about integrating physical and transition risks.
Explore how Moody's leads climate risk management in APAC insurance with strategic deals, collaborative events, and tailored solutions, addressing local regulatory needs and enhancing resilience.
We are pleased to announce that Finnish insurance group Fennia, has selected the Moody’s Climate Pathways solution to embed climate risk in their own risk and solvency Assessment (ORSA) and strategic asset allocation (SAA) exercises.
In the first of this series of six articles, we explore sectoral-level impacts using top-down modeling.
In the second of this series of six articles, we explore balancing bottom-up and top-down analysis for strategic asset allocation work, ORSA, and Task Force on Climate-related Financial Disclosures reporting.
In the third of this series of six articles, we explore choosing the right climate model to support your goals for strategic asset allocation work, ORSA, and Task Force on Climate-related Financial Disclosures reporting.
In the fourth of this series of six articles, we explore ways to broaden your modeling approach and identify missing components in your scenarios to improve interpretation.
In the fifth of this series of six articles, we explore the impact of physical and transition risks on asset returns.
In the last of this series of six articles, we present a simple case study on accounting for climate risks in asset allocation procedures.
Although it is accepted that climate risk will have to be included in the ORSA and its equivalents, it is unclear how much of it will be qualitative, how much will be quantitative, and the timelines for embedding the risk. One of this survey’s aims is to offer clarity.
Our specialized scenario modeling solution enables insurers, asset managers, and pension fund managers to quickly assess climate-related financial impact.
Models that extend the industry standard — a fully probabilistic approach to Models that extend the industry standard — a fully probabilistic approach to climate change risk.climate change risk.e industry-standard, fully probabilistic approach to climate change risk.
Provides foundational insights through extensive data and analytics that define current and forward-looking location-specific threats to real assets from climate-related event damages and business disruptions.
Evaluate financial and physical risks and assess the climate’s impact on commercial real estate markets under various scenarios, including current policies, delayed transitions, and Net Zero 2050.
EDF-X Climate Impact helps you understand how global warming and different policy responses affect future company performance.
Provides (re)insurers with a detailed understanding of the greenhouse gas (GHG) emissions associated with their insurance underwriting portfolios.
Interested in learning more about our offerings? Our solutions specialists are ready to help.