FIS gets a "highly commended" accolade from our judging panel for its technology that is helping firms meet regulatory requirements to understand the financial impacts of climate change on their operations.
Climate Risk Financial Modeler (CRFM) synthesises complex climate and financial data so companies can identify and project trends in asset damage and insurance premiums caused by climate change. Powered by the same risk engine as the FIS Insurance Risk Suite (formerly Prophet), the solution follows a two-year alliance that combines global climate data, analysed by PwC US, with the finance and insurance models of FIS.
For many companies, climate risk assessment has traditionally been a qualitative exercise that identifies dependencies on wholly owned assets or key suppliers within the value chain. CRFM goes further by enabling companies to understand the financial magnitude of these dependencies to avoid surprises and mitigate risk.
Users upload information relating to buildings they own, rent or otherwise rely on for their operations or investments. The solution uses the climate data and financial models to project future losses relating to climate perils and provides estimated values and statistics for damage to structures, contents and inventory, as well as business interruption costs – relating, for example, to investments, collateral, owned properties or any other operational dependency. Multiple climate-related perils are covered, both acute and chronic.
The judges were particularly pleased to see CRFM enabling projections of future insurance conditions in addition to asset damages. Climate change affects not only the frequency and severity of severe weather, but also the behaviour of global insurers, and the judges welcome a tool that produces more meaningful projections.
Beyond reporting, the solution also supports the strategic needs of corporates, risk managers, lenders and investment decision-makers through its ability to perform "what-if" scenario analysis on a portfolio of physical assets.
The solution is being continually developed. Key items on the roadmap are the addition of even more climate-related perils, as well as business risks introduced by a transition to a greener economy.
