investmentcarriere.nl

The role of damage functions in assessing physical climate risks

Nieuws
07-07-2025
Emre Doruk Önal
Physical climate risks are emerging as the dominant threat to institutional investors, and their materialization will have critical implications for financial markets.

Because physical risks are both uncertain and interlinked, one hazard can trigger cascading consequences. To better assess their exposure, investors are increasingly relying on physical risk damage functions within climate scenario modeling frameworks, to estimate potential losses and manage climate risks more effectively across both short and longer-term investment horizons. These models help them to consider not only for the potential impacts if such risks materialize, but also for how financial markets might respond to changes in the perceived likelihood of these events.

Understanding physical risk damage functions

In a simple context, physical risk damage functions quantify the relationship between climate variables, such as temperature, and resulting economic or physical damages. Different assumptions can be made about how damages evolve with rising temperatures -for example, a linear relationship implies a steady, proportional increase in damages, while an exponential one suggests that damages accelerate rapidly as temperatures rise, reflecting growing vulnerability or compounding effects.

[....]

Lees verder op: Ortec Finance

Gerelateerde vacatures

Geïnteresseerd in een carrière bij organisaties in ditzelfde vakgebied? Bekijk hieronder de gerelateerde vacatures en vind de perfecte match voor jou!
Lloyds Bank
Marktconform
Medior, Junior
Amsterdam
Als Junior Model Validator bij een dynamisch bankteam versterk je ons Model Risk Management en Model Validation team. Je valideert kredietrisicomodellen, voert diepgaande analyses uit, schrijft heldere rapporten en automatiseert...
Allianz
Marktconform
Senior
Rotterdam, Brussel
Als Senior Quantitative Risk Manager | Capital Management bij Allianz Benelux, leid je het Internal Model Approval Process (IMAP) project. Je werkt aan risicobeheer, betrokken bij solvabiliteitsactiviteiten, en analyseert productwinstgevendheid....
Top vacature
ING
7.499 - 11.926
Senior
Amsterdam, Eindhoven, Rotterdam, Zwolle
Als Sector Banker (Real Estate) - Business Banking NL bij ING ben jij dé expert die marktontwikkelingen vertaalt naar waardevolle inzichten voor ondernemers. Je werkt samen met multidisciplinaire teams om...
Rabobank
5.381 - 7.687
Medior, Senior
Utrecht
Als Product Manager Modellen Housing bij Rabobank leid je de inzet van kredietrisicomodellen binnen de hypothekenketen. Je vertaalt zakelijke behoeften naar modelvereisten, ontwikkelt nieuwe analytics, en werkt samen met stakeholders...