Moody's Corporation · NYSE:MCO
Moody's — Technical Presentation (June 2023)
39 slides from Moody's's technical presentation, June 2023
Slide 1: Climate on Demand
Climate on Demand Josh Turner, Climate on Demand Product Manager Claire Souch, Model Product Manager June, 2023
Slide 2: Agenda
Agenda 1. Climate Modeling within Climate on Demand 2. Climate on Demand Pro – Impact Modeling Overview 3. Moody’s RMS Global Modeling Methodology 4. Global Exposure & Vulnerability Modeling 5. Live Demo 6. Long Term Vision & Key Takeaways 7. Q&A Climate on Demand Professional, June 2023 2
Slide 3: Climate Modeling within Climate on Demand
1 Climate Modeling within Climate on Demand
Slide 4: Climate on Demand: Bridging the gap
Climate on Demand: Bridging the gap Source: www.climate.gov Catastrophe Risk Models Climate Models Climate-conditioned Cat Models Strengths / Advantages Strengths / Advantages Leverage strengths from each model & address limitations of each » Granular extreme events (e.g. Hurricanes) » Dynamic globa
Slide 5: Climate on Demand: Our full offering
Climate on Demand Our full offering Climate on Demand Climate on Demand utilizes a differentiating hybridization of global climate models and catastrophe modeling for deep risk analytics » Incorporates the best science from climate models and peer reviewed science » Supplements with additional downs
Slide 6: Climate on Demand Standard & Pro
Climate on Demand Standard & Pro Climate on Demand Standard users continue to have access to all features they currently have, including recently released RCP4.5 hazard data and scores Impact Modeling capabilities now available! Upgrade to a Climate on Demand Pro subscription to get access to all th
Slide 7: Climate on Demand Pro
Climate on Demand Pro How does our new offering enable deeper climate risk analytics? Climate on Demand quantifies damages in dollar terms, enabling deeper and more nuanced risk analysis relative to unitless scores » Compare assets & portfolios on a dollar-to-dollar impact basis across time horizons
Slide 8: Climate on Demand Pro: Deeper Risk Analysis
Climate on Demand Pro Deeper Risk Analysis Climate on Demand’s new capabilities enable users to: » Meet emerging TCFD requirements to quantify the material costs of climate change and perform scenario analyses across two RCPs and time horizons to the end of the century » Conduct more thorough due di
Slide 9: Climate on Demand Standard: Hazard Scoring
Climate on Demand Standard: Hazard Scoring Global Climate Model data Providing users with IPCC CMIP model output to understand changing hazard » Hazard information is meant to convey trends from climate models, with scores to globally contextualize » Hazard scoring is unchanged in this update which
Slide 10: Climate on Demand Pro – Impact Modeling Overview
2 Climate on Demand Pro – Impact Modeling Overview
Slide 11: Climate on Demand Impact Modeling Overview
Climate on Demand Impact Modeling Overview Global Climate Risk Data – Available in Climate on Demand Pro Impact Modeling using Hazard-to-Loss Relationships Properties Hazard » Financial Impact Quantification - Damage and impact scores for any location globally – Annualized Damage, Standard Deviation
Slide 12: Impact Metrics in Climate on Demand
Impact Metrics in Climate on Demand Annualized Damage Rate (ADR): Standard Deviation: – Expected damage percentage to an asset in an annual period – Measure of the volatility of the ADR – Depends on both the hazard the asset is exposed to and the ability of – Higher standard deviation indicates grea
Slide 13: Impact Scores
Impact Scores Approach & Methodology » Impact Scores are based upon the “risk metric” – Annualized damage ratio & standard deviation 100 Benchmark (volatility of damage) » Percentile with respect to risk metrics for corporate facility locations in our database for all Impact score scenarios and time
Slide 14: Portfolio Aggregations
Portfolio Aggregations Rainfall Loss Advanced portfolio analytics in Climate on Demand » Climate on Demand Pro aggregations provide impact insights at the portfolio level by accurately accounting for spatial correlations by peril – Accurately account for benefits of diversification / risks of concen
Slide 15: Global Coverage of Chronic and Acute Risk
Global Coverage of Chronic and Acute Risk Hurricanes & Typhoons ▪ In Flood Sea Level Rise Stock.adobe.com Stock.adobe.com Stock.adobe.com ▪ Accounts for varying impacts of climate ▪ Riverine and flash flooding at high-definition • Impact of sea level rise on coastal flooding + change for each Ocean
Slide 16: Moody's RMS Global Modeling Methodology
3 Moody’s RMS Global Modeling Methodology
Slide 17: Introducing Moody's RMS in Brief
Introducing Moody’s RMS in Brief Global leader in physical risk modeling coming to Climate on Demand Over RMS models Over of RMS model 1000 and data products 50% developers have top-university PhDs We spend more in R&D than anyone in the industry 120 covered by RMS models and data products countries
Slide 18: Modeling Methodology
Modeling Methodology Event-based modelling of all possible scenarios and their impact Events Hazard Vulnerability $ Financial What’s the hazard? What’s the damage? Financial Impact? Bottom-up weather simulations with Embedded Climate Thousands of impact curves to understand how assets • Assets Scien
Slide 19: Moody's RMS Climate-Conditioned Models
Moody’s RMS Climate-Conditioned Models » Climate change conditioning driven by robust science » Modeling of climate change impact Moody’s RMS » Multiple scenarios Present Reference Risk Models Moody’s RMS Climate Change Climate- Conditioning of conditioned Future events and Catastrophe Risk hazard M
Slide 20: Best Available Climate Science
Best Available Climate Science Winter Spring Use the best available climate change science This includes a wide range of data sources, for example: » Intergovernmental Panel on Climate Change (IPCC) reports » Coupled Model Intercomparison Project (CMIP) data (CMIP 5 & CMIP 6) » Coordinated Regional
Slide 21: Global Exposure & Vulnerability Modeling
4 Global Exposure & Vulnerability Modeling
Slide 22: Developing Vulnerability Curves
Developing Vulnerability Curves Key Components of RMS modeling Historical Damage + Claims Engineering Studies & Structural Engineering Field Reconnaissance Scientific Research + Design Models Data Climate on Demand Professional, June 2023 22
Slide 23: Capture All Components of Damage
Capture All Components of Damage Impact metrics and damage ratios combine loss from all three components Buildings Structural Damage Contents + Equipment Business Interruption, Loss of Revenue Climate on Demand Professional, June 2023 23
Slide 24: Exposure in Climate on Demand
Exposure in Climate on Demand Available in CoD Pro » Occupancy classes significantly influence: – Property's likely style – Construction materials and quality – Value Single-Family Residential Multi-Family Residential – Vulnerability of contents, and – Vulnerability to time-element losses » And ther
Slide 25: Exposure in Climate on Demand
Exposure in Climate on Demand Available in CoD Pro » Users enter activities as normal » Activities are mapped to one of four occupancies » Construction type, year build, number of stories are inferred from the Single-Family Residential Multi-Family Residential occupancy depending on the region » If
Slide 26: Building Characteristics in Climate on Demand
Building Characteristics in Climate on Demand » Composite vulnerability curves reflect typical mix of construction type, year built, number of stories depending on the location Occupancy / Region Wood Masonry Construction Year Built Number of Stories Reinforced concrete Steel Climate on Demand Profe
Slide 27: Calculating Building Damage
Calculating Building Damage Global Modeling in Climate on Demand » Each region has a suite of vulnerability curves for each peril, reflects variations in vulnerability by region » Composite Vulnerability curves determined by Occupancy Class based on the location to reflect typical mix of: – Construc
Slide 28: Climate on Demand Live Demo
5 Climate on Demand Live Demo
Slide 29: Long Term Vision & Key Takeaways
6 Long Term Vision & Key Takeaways
Slide 30: Climate on Demand Capabilities
Climate on Demand Capabilities Climate Change Scenario Analysis » Climate-conditioned impact and damage modeling for RCP8.5 & RCP4.5 – Time horizons out to 2100, including a baseline view of risk – Alignment to regulatory reporting frameworks & standards – Floods, Heat Stress, Hurricanes & Typhoons,
Slide 31: Climate on Demand Capabilities
Climate on Demand Capabilities Hybrid Climate Change-conditioned modeling approach Best-in-class Science and Modeling » Climate Model hazard data and scores » Impact Modeling - Risk identification, prioritization & quantification – Global modeling capabilities of Moody’s RMS, decades of expertise in
Slide 32: Climate on Demand Capabilities
Climate on Demand Capabilities Hybrid Climate Change-conditioned modeling approach RMS Impact Modeling Strengths available in Climate on Demand » Bottom-up climate change modeling is a better way to provide granular & forward-looking views of risk – Our approach better captures the impact and damage
Slide 33: Climate on Demand Product Vision
Climate on Demand Product Vision Expanding on the extensive Risk Screening capabilities for six climate hazards across different climate scenarios through 2100 in Climate on Demand, Climate on Demand Pro offers an additional level of analysis and insight on Risk Quantification: Adds Financial Damage
Slide 34: Climate on Demand Future Vision
Climate on Demand Future Vision The future of Climate on Demand will expand on its capabilities for physical climate Risk Quantification: Financial Damage Metrics Expands Hazard Modeling • Expand financial metrics with views on tail risk • Expand to other climate change scenarios • Granular views of
Slide 35: Key takeaways
Key takeaways » Climate on Demand provides instantaneous, globally-comparable climate risk exposure scores across six major hazards and their underlying indicators – floods, heat stress, hurricanes & typhoons, sea level rise, water stress, & wildfires for any location in the world (& Earthquakes) »
Slide 36: Key takeaways
Key takeaways » Portfolio analytics within Climate on Demand account for the benefits of diversification as well as concentration risks by accurately modeling spatial correlations, providing insight into the risks of a particular hazard likely to impact multiple assets simultaneously. » Climate on D
Slide 37: Q&A
7 Q&A
Slide 38: moodysanalytics.com
Joshua Turner Claire Souch [email protected] [email protected] moodysanalytics.com
Slide 39: Climate on Demand Professional, June 2023
© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liabilit