Three Obstacles For Climate Risk Digital Solutions Providers In The Financial Market

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Three Obstacles For Climate Risk Digital Solutions Providers In The Financial Market

Discussions during a late November event at the UK Centre for Greening Finance and Investment (CGFI) highlighted three key challenges for climate risk digital solutions providers selling to financial services firms:

1. Climate analytics must be accessible and comprehensible for different stakeholders

One panelist at the event, Susanne Chishti, an NED for several financial services firms, mentioned that as a board member the main issue is often that they do not have enough data to report to the Financial Conduct Authority. They require data companies and climate risk analytics firms to translate climate modelling and climate data into a business language that they can understand. This is an opportunity for climate risk digital solutions firms that can translate and explain climate science and risk terminology across stakeholder groups and company sizes, from small firms offering digital modelling to regulators and institutional asset managers.

2. Leaders at financial services firms need guidance on climate data use-cases

Financial services firms need to tell climate data modelers what their use-cases are. But, when asked what the most useful climate insights would be, panelist Andrew Elphick, Head of Innovation Mindset and Intrapreneurship at Barclays, said that they don’t know. They are still learning from climate scientists what it is possible for them to access. More discussion with climate risk digital solutions firms will help financial services firms create clear shopping lists.

3. Open-source platforms pose risks

Firms selling climate risk products must demonstrate their added value compared with an increasing number of open-source climate data platforms. One such data platform designed by the Global Resilience Index Initiative was shown at the event; others include Oasis Loss Modelling Framework and OS-Climate. Better communication on financial services firms’ needs will ensure vendors provide value for money, as free-to-use models without clear use-cases will be challenging for financial services firms to interpret and utilize.

The context for the event and discussions was the launch of the CGFI’s London Hub. The purpose of the hub is to encourage communication between, and innovation amongst, different stakeholders involved in providing climate risk digital solutions for financial institutions. Fittingly, the event was a good pitch for the hub’s existence.

For more information on geospatial data solutions and how climate risk digital solutions providers can align with three levels of customer ambitions, see the following reports:

Strategic Focus: Growing Reliance On Geospatial Data For ESG And Sustainability

Strategic Focus: Improving Climate Resilience With Digital Solutions 

Alice Saunders

Industry Analyst

Alice is an Industry Analyst in the Verdantix Net Zero & Climate Risk practice. Her current research agenda focuses on climate risk solutions and biodiversity. Alice holds a Masters in Nature, Society and Environmental Governance from the University of Oxford and a BA in English Literature from the University of Warwick.