Flood specialist JBA Risk Management has warned about the risks associated with the failure to use good quality data and sophisticated climate change intelligence to understand the impact of floods on physical assets that would impact investors’ portfolios negatively.
The warning comes as companies and organisations prepare to meet new annual reporting standards from January 1st, 2024, under the International Sustainability Standards Board’s (ISSB) IFRS S2 climate-related disclosures.
Between 2018 to 2022, worldwide losses from flooding were estimated at $300 billion, but only 15%, or approximately $45 billion was covered by insurance, highlighting the vast flood protection that exists globally.
The firm warns that as the “incidence of flooding rises as a result of climate change, the associated costs to both businesses and public bodies will also only continue to increase.”
Peter Brazil, Business Development Manager, Investment Markets, JBA Risk Management, commented: “JBA’s flood risk intelligence and expertise can help investors navigate through, and understand the full impact of, climate change on their physical assets to ensure there are no unquantified risks in their portfolios. We can also help them to understand, assess, and even support the adaptation, mitigation, or transition of those risks.
“Having a clear understanding of the likelihood of flood risk across an investment portfolio not only informs educated decisions about where to place long-term investment but also highlights opportunities that might previously have been dismissed as too risky. After all, the more precise the data and insights used the more indicative of the potential financial impact, including that on production, revenue generation and cash flow. And the lower the quality of the data used, the greater the potential of missing the risk.”
Assessing the full potential impact of the flood on a business portfolio entails the understanding of physical damage and the knock-on impact of disruption on day-to-day operations, cash flow and the balance sheet, says JBA.
The company asserts that its high-quality data, analytical tools and expertise can help ensure investment managers assess the physical flood risk on their portfolios down to an individual asset level, supporting informed investment and divestment decisions.
JBA’s flood risk experts use hydrological mapping, climate science and location-level analytics for every location in the world to produce flood data detailing complex insight to help businesses gain an informed understanding of the potential impact on their physical assets.
