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Original Risk: A Society for Change Agents

Nephila backed Jupiter launches ClimateScore risk analytics product


Jupiter, a tech company focused on provision of predictive data and climate risk and resilience analytics that counts the largest ILS fund manager Nephila Capital as one of its investors, has launched a new product that it boasts provides “analytics of physical climate risks for the entire planet.”

climate-change-risk-imageJupiter’s products and services assist companies in more accurately predicting and managing risks from extreme weather, sea-level rise, storm intensification and rising temperatures caused by medium- to long-term climate change.

The data and analytics, as well as climate and severe weather risk focus, attracted insurance-linked securities (ILS) specialist Nephila Capital, who participated in Jupiter’s $23 million Series B funding round back in 2019.

The funding has helped to propel Jupiter’s product development forward and one of the results is the launch of ClimateScore Global.

Jupiter explains that ClimateScore Global is, “A next-generation climate risk analytics tool that provides physical risk assessment for any point on the land surface of the planet through the year 2100.”

The insurance and reinsurance industry is a little more used to analysing its risks as they stand right now, or based on specific peril driven scenarios to see how events might impact their portfolios of risk.

But perhaps less familiar in looking at those portfolios and trying to understand how the impacts of climate change may affect them over such as long horizon as out to 2100.

Climate risk analytics are coming of age and Jupiter is driving innovation in the sector, with a solution that works for stakeholders across many industries.

The new product is applicable for any stakeholder, organisation or corporation with assets, or even perhaps supply-chain links, that could be exposed to changing weather and environmental hazards due to climate change.

For the insurance, reinsurance and also ILS sector, ClimateScore Global is also applicable, as it could help underwriters look at longer-term changes to the risk profile of individual contracts and portfolios, helping them establish their longer-term risk appetite, but also perhaps helping them to design and provide new risk transfer products and hedges with a longer-term horizon.

ClimateScore Global predicts the future physical risk from flooding, extreme heat, high wind, drought, wildfire, hail, and earthquake for any point on the land surface of the planet .

It’s a powerful offering, but when combined with Jupiter’s high-resolution ClimateScore Planning suite of tools, users can benefit from the only global to street-resolution climate risk analytics solution, Jupiter said.

How these insights can help risk markets develop new products, create targeted climate specific hedges and furnish their sales process with better and more actionable climate risk data to serve their clients, is just one side of the equation.

Perhaps more interesting than the application of tools like Jupiter’s ClimateScore Global in the risk related industries of reinsurance and ILS, to us at least, is how the development of climate risk analytics software tools that can provide a forward-looking view of climate hazards facing the world’s major corporations and public entities, can ultimately increase risk awareness and drive greater uptake of risk transfer and insurance against climate risks.

Jupiter explains what the product means for its users:

ClimateScore Global’s scope and granularity enables users across numerous industries and the public sector to project how a portfolio of assets may be affected by climate change: the perils it will be exposed to, the driving segments and locations, and how that will change over time and across varying carbon emissions scenarios.

ClimateScore Global incorporates dozens of the scientific community’s most authoritative climate models coupled with machine learning, land use and elevation data, and models for hydrology, wildfire, severe weather, and other variables.

Features of ClimateScore Global include:

  • Metrics to directly measure flood, wind, heat, wildfire, drought, hail, and earthquake physical risk, each offered at multiple customizable return periods and peril thresholds, and put into context for users via scores and benchmarks by region
  • Best-in-class spatial resolution available worldwide, tailored to required use cases and providing a single, consistent solution for quantifying climate risk for globally distributed companies, supply chains, and portfolios
  • Data available at five-year increments from 2020 through 2100, enabling medium-term and long-term projections of future risk
  • Directly maps physical climate risk to financial impact by peril, region, asset, or sector
  • Supports multiple climate change scenarios to quantify how risk responds to different political responses to climate action
  • Delivery of data via on-demand reports, APIs, industry-standard data science tools, and interactive applications

By enabling major organisations, public and private, to view how their overall risk profile and exposure to climate related factors is forecast to change over time, these organisations can be empowered to take action, be that in terms of increasing their resilience, reducing their risk, or planning for and securing the necessary financial tools to transfer and mitigate their climate risks, which on a forward-looking basis could be a whole new class of climate risk hedging tools.

“ClimateScore Global is the most comprehensive, transparent framework for assessing global climate risk available to enterprises today. It provides unique access to the underlying physical risk measurements, their uncertainty, and economic loss functions to help firms intelligently manage their capital planning and strategy issues and address rapidly increasing physical risks and regulations as well as shareholder demands, including increased TCFD reporting,” Rich Sorkin, CEO of Jupiter explained. “In an era where a pandemic has severely disrupted the global economy and revealed the fragility of supply chains, it will be especially important to focus on this next set of critical risks as the economy recovers.”

One of Jupiter’s customers is Japanese insurance group MS&AD, who is also an investor in the company.

MS&AD has already deployed the ClimateScore Global platform within its business, to gain a better understanding of the impact of long-term physical risks to its portfolio as well as to its clients.

“Our clients need to quantify climate-related risk at the asset level across their portfolios over time and based on different scenarios, which is in accordance with Taskforce on Climate-Related Financial Disclosure (TCFD) recommendations,” explained Terumi Nakamura, CEO of MS&AD InterRisk Research & Consulting. “We’re looking to Jupiter and ClimateScore Global to help us model probable impacts of perils from extreme weather at hyperlocal resolution, based on different emissions scenarios. It is very attractive that their service allows us to analyze potential natural hazard risks on flood, high wind, and extreme heat today and for every 5 years through to 2100.”

It’s no surprise Nephila chose to back Jupiter earlier in the companies development.

These types of climate risk analytics products can be instrumental in helping ILS managers better understand the exposures in their large portfolios of climate exposed risks, while also furnishing them with data analytics supportive to the sales process, or supportive of new product design for climate-related hedging.

Jupiter’s products can help ILS managers and those in the reinsurance market understand weather and climate linked insurance risk at a more granular level, which is absolutely key when working to create and manage portfolios of risks for third-party investors.

Especially at a time when those investors are looking for increasing comfort that ILS managers are doing whatever they can to understand how the climate affects the potential for losses to their insurance and reinsurance portfolios.

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