Strategic Focus: AI Innovations In Physical Climate Risk Software

Executive Summary

Physical climate risks remain challenging to quantify, due to persistent gaps in both climate data and modelling approaches, which weaken adaptation and investment decisions. Physical climate risk software vendors are embedding AI to bridge these gaps by downscaling global climate models (GCMs), enriching asset and entity data, and translating technical outputs for decision-makers. However, vendor approaches vary widely, from physics-first models that apply AI selectively, to platforms that embed AI across key workflows. This variation makes the level of AI in a platform a procurement decision in its own right. Geared towards risk and resilience leaders looking to invest in physical climate risk solutions, this report outlines how vendors integrate AI, the various use cases where AI adds most value and the governance measures vendors apply – helping firms select a solution that matches their tolerance for AI-driven outputs.