Moody's Analytics - Climate Pathways
Type of SystemClimate risk management
Type of platform
What are the typical implementation costs?
Moody's Analytics does not disclose pricing.
How long does your software take to implement on site?
This depends on the customer’s requirements, but often customers can be up and running very quickly. For a simple configuration, installation and setup may only require a few hours.
Please name companies that use the system/solution
Most recent significant update:
We have significantly improved our climate risk capabilities with the launch of our Scenario Generator Climate Pathways web-based application.
Scenario Generator Climate Pathways is a software as a service (SaaS) solution, which enables users to generate paths for financial and asset class return variables to assess climate-related risk and anticipate the financial impacts on asset and liability projections. Scenario Generator Climate Pathways is hosted in the cloud and managed by Moody's Analytics. A user-friendly interface affords the flexibility and transparency to experiment with different scenarios and fully understand and validate the results.
Planned future enhancements:
How does your solution integrate with third-party systems or in-house systems?
Our scenario generation solutions and Climate Pathways integrate with Moody’s Analytics AXIS™ actuarial modelling system and all major ALM systems. We have grid-compatible architecture that works with grid products from Microsoft and Digipede, which customers license separately from these companies.
What is the key attribute of your product(s) that differentiates it from your competitors?
Our product provides the scenario content insurers need to measure the financial impact on their business from climate risk by translating the climate temperature paths into financial returns. We look beyond the impact of GDP changes, specifically quantifying physical damages and impairment costs in each scenario, and account for the effect of changes in costs of capital on financial market valuations.
Our scenarios also capture current market prices, and the implications of these for future returns, rather than taking a long-term equilibrium basis for initial pricing of assets and risks.
Using a structured approach to quantifying the costs in each scenario allows us to consistently adjust the projected paths for different financial variables across the range of published NGFS scenarios, for multiple scenario assumptions and uncertainties, and for a mix of different investments and portfolio exposures. Thus, we can explore the array of possible pathways in a multi-scenario framework in ways that recognise the risk and uncertainties inherent in long-term economic or climate modelling.
The app offers the opportunity and flexibility to experiment with different assumptions, using the outputs to quickly and easily enhance decision-making processes.
What trends are you seeing in terms of customer demand?
External scrutiny, corporate values, and financial impact are driving insurers to address climate challenges across a range of business functions. We are experiencing demand for risk identification and measurement relating to climate risk in economic and regulatory capital. Another trend is assessment through ORSA, and monitoring climate-related risk for business solvency and capital.
Complying with the TCFD mandate and including climate risk impact in regulatory and financial reporting is also important. A further dimension is board understanding and oversight of climate related risk.