CoreLogic Rolls Out Climate Risk Analytics

ESG is a popular term among investors, but not for social cred. With heightened and lengthened seasons for natural disasters at a time of global climate change and atmospheric warming, the issue isn’t political comeuppance but cold and bitter costs.

The Federal Emergency Management Agency last year updated its National Flood Insurance Program, with underwriting getting stricter and prices higher. A report from reinsurer Swiss Re earlier this year noted that “global economic losses from floods amounted to USD 82 billion, yet insured losses stood at slightly more than $20 billion, indicating a large protection gap.” Those were the results of 50 severe flood events around the world. Hurricane Ian in Florida alone causes billions in damage. Protecting New York City and northern New Jersey alone from big storms will run an estimated $52 billion, according to the Army Corp of Engineers.

But there is a shortcoming in warnings, as they tend to be broad for entire regions, but that doesn’t easily translate into direct information that can aid in specific CRE strategic planning. That’s what CoreLogic is trying to address with the announcement of its Climate Risk Analytics, which is “designed to help government agencies and enterprises measure, model and mitigate the physical risks of climate change to the real estate industry, initially through 2050.”

“Mitigating the effects of climate change is a monumental task—one that demands a powerful and expansive data and modeling tool that surpasses industry standards,” a company press release quoted Patrick Dodd, president and CEO of CoreLogic. “For more than 20 years, CoreLogic has amassed a comprehensive physical and financial property dataset and honed the most accurate peril modeling techniques available today. We combined our extensive technological capabilities and data science to create a solution that helps our clients rise to the challenge climate change poses to our nation’s financial infrastructure.”

The company claims that its data and platform can give insight into property-level physical insights, looking at data like first floor height and construction and remodeling history. Property-level financial views have “accurate replacement costs” and tracks valuation data to estimate the change of property market value as a result of climate change. “CoreLogic’s models include 300,000 years’ worth of scientific and climate simulations across the nine major perils for current and future climate conditions (Hurricane, Storm Surge, Flood, Severe Convective Storms, Winter Storms, Wildfire, Tsunami, Earthquakes and Fire Following) and their impacts on specific properties.”

The software, which uses Google cloud services, can supposedly lay out risk by decade through 2050. If it does what it claims relatively accurately — and all simulations are just that, estimates, so not a clear picture of the future — the combination of climate data, modeling, and specific financial tracking and projections would seem a useful tool.