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Climate change

RiskThinking.ai Leads Groundbreaking Climate Risk Exercise for Canadian Financial Sector

Strategic Insights

— 2 min read

RiskThinking.ai, a global leader in climate financial risk data and analytics, was the sole vendor selected to provide essential flood risk data and analytics for the Standardized Climate Scenario Exercise 2024 (SCSE). The SCSE, led by the Office of the Superintendent of Financial Institutions (OSFI) and the Autorite des Marches Financiers (AMF), aimed to deepen the sector's understanding of climate risks, strengthen measurement capabilities, and deliver a standardized view across institutions. The results of this significant stress test, outlined in the newly released report, "Strengthening Climate Risk Financial Resilience," standardized data from over 250 federally and provincially regulated financial institutions. The physical risk module for flooding, powered by RiskThinking.ai's proprietary platform, covered financial exposures tied to eleven major urban regions and evaluated risks to approximately $904 billion in mortgage and real estate assets and $3 trillion in insured property values.

Key Takeaways:

  • RiskThinking.ai provided essential flood risk data and analytics for the Standardized Climate Scenario Exercise 2024 (SCSE) led by the Office of the Superintendent of Financial Institutions (OSFI) and the Autorite des Marches Financiers (AMF).
  • The SCSE report highlights critical data gaps in public data, leading to a partnership with a private vendor, RiskThinking.ai, to directly provide flood depth maps to financial institutions.
  • RiskThinking.ai's proprietary platform was used to evaluate risks to approximately $904 billion in mortgage and real estate assets and $3 trillion in insured property values.
  • The report underscores the urgency for the tools and analytics that RiskThinking.ai provides, noting several key conclusions, including critical data and capability gaps, heightened and underestimated exposures, and a new regulatory expectation.
  • The OSFI report highlights the importance of a robust, forward-looking, and granular data foundation in managing systematic climate risk.
  • RiskThinking.ai's CEO, Dr. Ron Dembo, emphasized the firm's commitment to providing critical data and analytics for the financial sector to mitigate climate risk.

Statistics:

  • RiskThinking.ai's proprietary platform evaluated risks to approximately $904 billion in mortgage and real estate assets.
  • The SCSE report covered financial exposures tied to eleven major urban regions.
  • The total value of insured property at risk is approximately $3 trillion.
  • 250 federally and provincially regulated financial institutions participated in the SCSE.
  • Only 40% of Canadian homeowners purchase optional flood insurance, highlighting a significant risk to the banking sector.

Sources:

  • "Strengthening Climate Risk Financial Resilience," Standardized Climate Scenario Exercise 2024 (SCSE) report, Office of the Superintendent of Financial Institutions (OSFI) and the Autorite des Marches Financiers (AMF).
  • RiskThinking.ai news release.

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