Pricing climate resiliency: How AlphaGeo quantifies the financial impact of climate perils

Leveraging AlphaGeo’s innovative geospatial insights to enable offensive and defensive portfolio positioning.??

Climate risks are intensifying in their severity – and the thresholds for large-scale changes to the natural environment are likely to be exceeded within the next decade. These forces are disrupting real estate performance, lending heightened importance to asset adaptation and resiliency.???

Over the past four months, Zurich Insurance Group (ZIG) has worked with AlphaGeo to develop strategies to proactively safeguard investment capital while positioning its real estate portfolio to be resilient to future climate perils. AlphaGeo uses 45 billion spatial datapoints in an AI-powered SaaS platform to provide granular risk and resilience analytics for any location in the world. It captures the likely incidence of heatwaves, fires, floods, droughts, and storms under multiple climate pathways and time horizons. Even more significantly, AlphaGeo is a pioneer in mining available datasets of physical adaptation features—such as flood controls and levees, fire monitoring stations and water desalination plants—providing a spatial index of location resilience.?

AlphaGeo’s models are higher in resolution and more up-to-date and comprehensive than openly accessible data. At the same time, the company’s climate resilience data is the only globally continuous data layer on location adaptation.?

AlphaGeo’s toolkit has both ‘defensive’ and ‘offensive’ applications. It assesses operational costs, including utility expenses and insurance premiums, to provide a more accurate forecast of future returns.? This “climate discount rate” gives clients a more accurate method for value-at-risk (VaR) assessments. At the same time, the analysis can anticipate which locations will potentially offer stronger returns due to their higher resiliency characteristics.??

AlphaGeo Founder & CEO Dr. Parag Khanna says, “Accelerating climate change cannot be addressed through mitigation measures alone. As Darwin may have predicted, the fittest investors will be those who adapt the fastest. We applaud Zurich Insurance Group for grappling with both the strategic and technical dimensions of this immense challenge and are grateful for the opportunity to work with them.”?

Andrew Angeli, Global Head of Real Estate Research & Strategy at Zurich Insurance, says, “The increased frequency and severity of extreme weather events is forcing real estate investors to think differently about climate-related physical risk. New tools are needed to decipher how the complexities of climate change may impact future real estate performance. AlphaGeo’s innovative application of hyper-local geospatial data with prevailing climate modeling provides a glimpse into the future and enable better informed investment decision making.”?