Comprehensive Climate Risk Analysis

Early consideration of climate change adaptation, in climate risk management and policymaking, requires detailed risk analysis and forward-thinking planning. However, a global shortage of climate and disaster risk information is damaging the confidence needed for investment and risk finance focusing on resilience, leaving vulnerable communities exposed.

Climate risk modelling and analysis can provide decision makers with the timely information they need in order to determine climate change adaptation strategies and turn policies into action. To this end, under its first pillar of activities, the ISF operates effectively at two levels. In addition to undertaking climate risk assessments on-demand, the team has expanded its reach to support sovereigns build their own capacities in climate risk modelling through the Global Risk Modelling Alliance (GRMA) programme.

Global Risk Modelling Alliance (GRMA)

The Global Risk Modelling Alliance (GRMA) results from a strategic agreement between the Insurance Development Forum (IDF) and V20 Group. Funded by KfW on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), and supported by the international insurance industry, the GRMA is hosted by the ISF, and managed by Frankfurt School of Finance & Management. The GRMA programme is a significant contribution to the Vision 2025 of the InsuResilience Global Partnership, which aims to catalyse financial protection for 500 million vulnerable people by 2025.

The GRMA brings access to climate and disaster risk insight where it is needed the most. Working side by side with officials and local experts in ministries and mayoral offices, it offers open risk management tools, data and access to operational risk finance expertise. It relies on a three-step process for democratising risk understanding, from providing technical assistance service, co-developing models, and data for public good, and enhancing access to open risk modelling platforms.

Since its launch in June 2022, there has been significant interest and traction from the international community. The first country request for GRMA programmatic support was approved in November 2022.

Sovereigns who are interested in applying for GRMA support are encouraged to submit a Letter of Intent here .

Our Climate Risk Studies

We engage in the development and funding of comprehensive Climate Risk Analysis and assessment studies as part of the development of climate adaptation projects - including Climate Risk Insurance solutions as an integral component.
The tools required to undertake such climate risk analyses are already available and can be implemented globally enabling decision makers to answer the most pressing questions they are facing today (see below).
 
Thereby, the ISF contributes to the Vision 2025 of the InsuResilience Global Partnership of "improving access to and understanding of data and modelling for vulnerable countries and communities at different regions, ensuring that information related to climate and disaster risk finance is readily available and user-friendly to the global community".

Economics of Climate Adaptation Studies (ECA)

The Economics of Climate Adaptation (ECA) methodology offers a systematic and transparent approach that combines probabilistic risk modelling techniques of CLIMADA with in-depth, inter-sectoral stakeholder discussions. The framework provides decision makers with information about potential climate-related damage to their environment, economies and societies. By quantifying future climate risks, ECA studies help decision makers to identify and prioritise cost-effective climate change adaptation measures for a variety of sectors.

A key advantage is the early integration of risk analytics into project planning and the assessment of adaptation or land use programmes. Thus, the results from CLIMADA/ECA studies can be used as a foundation for adaptation strategies, including National Adaptation Plans (NAPs), and/or as feasibility studies required by international funding institutions.

Currently, we are implementing ECA studies in Honduras, Ethiopia and Vietnam in cooperation with ETH Zurich and United Nations University – Institute for Environmental and Human Security (UNU-EHS). The three studies all focus on different hazards, assets, environmental and institutional settings highlighting the methodology’s flexibility.

CLIMADA - Open-source Risk Modelling Platform

CLIMADA stands for climate adaptation and is a probabilistic modelling tool used to conduct risk assessments. CLIMADA provides a robust analysis of the cost and benefits of adaptation measures and allows informed resilience investments into adaptation and disaster risk reduction. This open-source and open-access global platform uses state-of-the-art risk modelling and options appraisal. Developed by the insurance sector, the platform provides globally consistent multi-hazard risk assessments on scales from national to local levels. Using the probabilistic modelling approach provides the ability to estimate the expected economic damage as a measure of risk today, the incremental increase from economic growth and the further incremental increase due to climate change.

Mainstreaming Climate Risk Analysis using open-source platforms like CLIMADA, therefore, promotes cost-effective adaptation measures and spur decisive action.

We are conducting at a national scale a quantitative CLIMADA study in Vietnam in cooperation with ETH Zurich and AXA.

Pilot Studies

The KfW Development Bank implemented two pilot studies in Bangladesh and El Salvador, using the ECA approach to support decision makers in identifying their climate change adaptation measures. The evaluation of these pilot studies, as well as already existing ECA documentation and tools, are summarised in the ECA Guidebook