Aon’s Climate Risk Monitor has been significantly enhanced through a collaboration with flood expert, Fathom, aimed at offering clients improved flood risk assessment capabilities. Initially launched in March, the Climate Risk Monitor enables clients to visualize and analyze their exposure to physical climate risks, aiding in more informed decision-making. Aon’s data indicates a significant influence of climate-related perils on the property insurance market, evidenced by over $125 billion in insured losses due to weather-related catastrophes in 2024.
Integrating High-Resolution Flood Data
The partnership with Fathom enhances Climate Risk Monitor by integrating high-resolution flood data, allowing for detailed analyses of flash, river, and coastal flooding, including rising sea levels. This new capability provides projections of flood risk across various emissions scenarios at a 10-square-meter resolution in the US, UK, and Japan, and 30 square meters in other regions. This enhancement supports re/insurers in understanding flood peril insurability and meeting due diligence, disclosure, and regulatory requirements.
By incorporating Fathom’s high-resolution flood data, Aon’s Climate Risk Monitor can now offer more precise and localized flood risk assessments. This precise data is invaluable for regions prone to various types of flooding, such as coastal areas vulnerable to sea-level rise or inland regions susceptible to river flooding. The detailed data application enables a more in-depth analysis, assisting clients in understanding and mitigating their flood risks comprehensively. This represents a critical strategic advancement in asset management and preservation.
Comprehensive Climate Hazard Assessment
Climate Risk Monitor assesses a broad spectrum of climate-related hazards, such as drought, extreme rainfall, heat, freeze, tropical cyclones, and wildfires under various climate change scenarios. By generating diagnostic reports and geographical visualizations, it helps clients understand the impact on individual assets, entire portfolios, and specific locations. Additionally, Fathom’s data is included in Aon’s Florida Flood v3.0 model within the ELEMENTS 18 catastrophe modeling suite.
The tool’s ability to evaluate multiple climate hazards ensures that clients receive a holistic view of their climate risk exposure. This comprehensive assessment is critical for developing effective risk mitigation strategies and making informed decisions about resource allocation and investment. By understanding the interplay between different climate hazards, clients can better prepare and respond to the multifaceted challenges posed by climate change. This can, in turn, help safeguard assets and ensure more resilient investments.
Enhancing Decision-Making and Risk Management
Liz Henderson, Aon’s global head of Climate Risk Advisory, highlights the significant role of flood dynamics in climate change, emphasizing the collaboration’s aim to enhance value for clients. This includes improving decisions on physical risk management and sectors such as health, resource allocation, and investment. Harry Vardigans from Fathom underscores the importance of integrating high-resolution flood risk data to assist clients in managing global flood exposure amid increasing climate volatility.
The enhanced Climate Risk Monitor supports re/insurers by providing vital insights necessary for risk mitigation and transfer strategies. It serves to demonstrate climate awareness to stakeholders and plays a pivotal role in climate disclosures. Furthermore, this tool informs risk selection, pricing, and re/insurance renewals by converting climate data into actionable insights. Henderson notes that risk managers can harness Aon’s data to better comprehend climate risk, guiding property insurance placements and securing optimal limits and renewal pricing through collaboration with Aon’s brokers.
Supporting Regulatory Compliance and Stakeholder Communication
The integration of high-resolution flood data into the Climate Risk Monitor also aids clients in fulfilling due diligence, disclosure, and regulatory requirements. As regulatory bodies increasingly mandate climate risk disclosures, having access to detailed and accurate flood risk assessments is crucial for compliance. The tool’s capability to generate diagnostic reports and geographical visualizations facilitates effective communication of climate risks to stakeholders, including investors, regulators, and customers.
By offering a comprehensive picture of flood risk, the Climate Risk Monitor enables clients to showcase their commitment to climate resilience and sustainability. This transparency is essential for building trust with stakeholders and ensuring that organizations are prepared for the evolving regulatory landscape. Insights from the tool also support strategic decision-making, guiding clients in prioritizing investments in climate adaptation and resilience measures. Thus, it plays an instrumental role in fostering long-term sustainability and adherence to regulatory standards.
Leveraging Advanced Technology for Better Insights
Aon has substantially enhanced its Climate Risk Monitor through an innovative collaboration with flood risk experts, Fathom. This partnership aims to provide clients with superior flood risk assessment capabilities. The Climate Risk Monitor, initially launched in March, allows clients to visualize and examine their exposure to various physical climate risks, facilitating more informed decision-making processes. Data from Aon highlights a significant impact of climate-related hazards on the property insurance market. This has been vividly illustrated by the over $125 billion in insured losses resulting from weather-related catastrophes in 2024 alone. The combination of Aon’s broad data and Fathom’s flood expertise ensures that clients receive a comprehensive evaluation of potential climate risks. This enhanced understanding is crucial in anticipating and mitigating future losses, thereby supporting better preparedness and resilience in the face of increasingly common climate-related events. Thus, Aon and Fathom together are setting a new standard in climate risk assessment.
