Aon will collaborate with climate risk analytics firm Jupiter to help its financial institutions clients quantify and disclose their climate-related financial risks. This will assist global financial institutions in navigating the increasing volatility resulting from climate change.
A media release by Aon said financial institutions in many jurisdictions are now expected by regulators to quantify, disclose and manage the climate-related financial risks that exist in their investment and loan portfolios.
“This new collaboration between Aon and Jupiter will calculate the range of potential impacts of climate change on financial institutions’ balance sheets, assisting them to identify risks and opportunities and to respond to the increasing volume, specificity, and quantification of climate regulations and disclosure requirements,” Aon said.
The Jupiter collaboration will increase clients’ experience when engaging with Aon, while also having access to the firm’s catastrophe modelling and risk consulting capabilities. With such comprehensive service, financial institutions can re-evaluate capital needs, address volatility and build business resilience while satisfying regulatory requirements.
Aon Reinsurance Solutions global growth leader Joe Monaghan said, “We believe that such comprehensive analyses will become even more crucial to financial institutions understanding the impact of climate change while maintaining operational effectiveness and regulatory compliance.”
The global economy is increasingly exposed to climate change risk, creating unpredictable business and operational environments for financial institutions. Meanwhile, the physical risks of climate change are severe: in 2021 natural catastrophes caused $343bn of global economic loss – nearly 30% above the 21st century average, according to Aon’s 2021 Weather, Catastrophe and Climate Insight report.
Financial institutions globally maintain a critical role in a transitioning economy, navigating a complex network of first- and third-party climate risks.