Meteo Protect, an SAP® Startup Focus member, and Europe’s leading provider of weather risk insurance, has been nominated by stakeholders, users and experts as a leading “Insur Tech” for the European Fintech Awards 2017. Winners will be determined by a combined public vote and expert assessment, with awards being given at the European Fintech Awards and Conference in Brussels on 27 September. The European Fintech Awards 2017 celebrates “innovators that shape the future”.
Effects of climate change mean unexpected new winners, and losers, in finance.
In what may be viewed as a fable for the times, scientists are looking to climate data to explain how traditional safe burrows have become hunting grounds and food chains have been upended. Risk managers are struggling with the same, confronted with the unexpected new threats, and opportunities, arising from the effects of climate change.
In a shocking twist that is baffling scientists, the cat is not only getting the mice, but the catfish is too. Whilst the hunt of mice by cats has become an idiom for the constant pursuit of one’s prey, it was hardly to be expected that this cartoonish relationship would one day extend to catfish too. Yet, in an article recently published by the scientific journal “Journal of Arid Environments”, Australian researchers have the grisly evidence, having discovered the bodies of Notomys alexis, or Spinifex hopping mice, in the stomachs of almost half of the lesser salmon cat-fish sampled in the Ashburton River of Northwest Australia.
As 2015 wound to a close, it was assigned to the record books as the world’s warmest year. Of course, global warming is widely considered to be at play, but meteorologists are particularly interested in the strength of this year’s El Niño, which has exacerbated droughts in some areas, increased floods in others, and led to an unusually mild winter in North America and Europe. The effects of this unusually warm winter on the world economy are representative of the diverse financial consequences of El Niño and of climate variability generally, with weather being blamed for increased production costs, reduced revenues, and reduced GDPs. The question for each of these companies is whether they were prepared for El Niño and integrated weather risk management into their development strategies.
Exploring the El Niño phenomenon
El Niño is well known as a cyclical phenomenon that occurs about once or twice per decade that sees the warm waters of the central Pacific expand eastwards towards North and South America. During the summer period, it increases the risk of decreased rainfall in the Eastern Pacific (India, Indonesia and in the northern part of Australia), and conversely, it rains more in the southern United States and on the west coast of South America. In winter, when El Niño peaks, temperatures are abnormally high in North America and Europe, and there is more intense storm activity in the Gulf of Mexico. It is also accompanied by intense rains. El Niño leads to a significant increase in the number, duration and intensity of weather anomalies around the world.
DOI: 10.15200/winn.145225.55676 provided by The Winnower, a DIY scholarly publishing platform
A new white paper has been released today by Meteo Protect demonstrating the importance of unseasonal weather on the sales performance of UK retailers, and the growing need to actively manage its financial consequences. The extent to which retail companies are exposed to climate variability is likely to be an eye-opener for many banks, regulators, analysts and investors. As climate variability is increasing, the risk to which they are exposed requires urgent action.
The research report thoroughly investigates the relationship between monthly sales and climate variability. For the first time, for each season, retail sectors are ranked according to their sensitivity to temperature, precipitation, humidity rate and wind speed.
The authors provide retail managers with a methodology to calculate the contribution of weather to sales performance and to evaluate sales at risk caused by climate variability. They also provide analysts with rankings that classify retail sectors according to their sensitivity to climate variability.
To mitigate the exposure to climate risks, the idea that geographical diversification is a natural efficient hedge is wrong, and the scientific evidence exposed in this report is unequivocal. Climate variability is a risk that needs to be managed like any other financial risk. One way to become more resilient to climate risks is to use weather-index products that are designed to pay in case of unfavorable weather. If companies are resilient to climate variability on an on-going basis, they will, by definition, become resilient to climate change.
The contribution of this research paper is of course not limited to the UK as the methodology is reproducible to other countries and sectors. A must-read for finance executives and business managers ahead of COP21.
Download the White Paper
DOI: 10.15200/winn.144524.45408 provided by The Winnower, a DIY scholarly publishing platform