Project will look at weather changes on business
The University of Reading’s Walker Institute for Climate System Research and Deloitte have launched a joint initiative to provide scientific research and analysis into the implication of local and regional changes in climate and weather extremes on business.
The devastating floods in the UK during 2007 show just how vulnerable property and infra-structure are to extremes in the weather. If such extremes become more frequent – as predictions of climate change suggest – the impact on business could be immense, particularly in areas like insurance, mortgage lending, commodities and retail, said Deloitte.
Professor Nigel Arnell, Director of the Walker Institute, said: “This is a very exciting partnership giving us the opportunity to use our expertise in climate extremes and hazardous weather, as well as our climate modeling capability, to really benefit business. There is no doubt that in the next few years the enhancement in our models will lead to improved climate change projections, something of significant value to business.
“The impact of climate change on property prices and the knock-on effect to mortgage lenders is a key area of focus. The Association of British Insurers is warning of dramatic increases in UK insurance costs which could render some properties effectively uninsurable. This is likely to affect house prices, with values falling in high risk areas and rising where risk is lower.
“It is conceivable that we will see these kinds of changes in the next 20 years. Mortgage lenders will need to consider climate change as part of their wider risk portfolio.”
Dr Lis Gibson, the partner leading the climate change impact services at Deloitte, said: "We are delighted to have the opportunity to work with leading academics to bring the best advice to our clients in a fast moving and critical area.
“There is increasing demand from our clients across a range of sectors for better information and analysis of what sustained and variable climate change could mean to their business in the short, medium and long term.
“For businesses, like insurers, banks, retailers and the travel industry, to be able to assess the possible risks, they need much more detailed advice about local and regional changes in climate and weather extremes, not just for 2100, but for 2010 or 2015. Anticipating this trend we believe that in five years time it will be the norm for Chief Risk Officers to have contingency plans based around the impact of climate on their business as the interdependencies of climate risk shocks and financial markets become better understood.”
The Walker Institute is leading research to develop more detailed climate models and they are already showing improvements in simulating weather systems like European storms and hurricanes, which bring some of the most damaging impacts.