Climate related risks and their ‘physical risk’ implications are considered key to the stability of the financial system and therefore a major area of attention to unlock financially sustainable growth within the EU Sustainable Finance strategy. Physical risks can impact the financial sector by increasing the credit risk that can materialise by a worsening of the borrower’s repayment capacity and/or because of direct damage to physical collateral. The European banking authorities are addressing the climate related risk topic with a series of new disclosure requirements to financial institutions.
To support financial institutions to identify and disclose their exposure towards climate change events SustainAdvisory has developed a proprietary Climate Risk Indicator.
AWARE© – Accident Weather Analytics Risk Events
A synthetic indicator of risk from climate change that assesses the “physical risk”, i.e. the risk of losses caused by climate events, including extreme weather events and related hydrogeological incidents. AWARE has a set of sub-indicators by event type (intense and frequent rainfall, floods, temperature increase, fires, landslides) and is available throughout the Italian territory and within administrative units (municipalities, provinces, regions).