## Climate Intelligence Forecasting Brief PRD Write-up

Bringing climate data to assess business risk

Moldelling a complex reality of climate risk to help businesses, investors and administrations be prepared, analyze and mitigate it ahead of time.
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### Preface ( for our internal team members)
The effects of climate change will be random, uneven, sudden/ubiquitous, ranging from those that disrupt daily life, such as damaged or flooded infra, to gradual impacts like declines in labor productivity and widespread threats to global welfare through decreased crop yields, supply problems, economical crisis and so on..

#### A Quick Use case
CAC40 investors and businesses were concerned about the vulnerability to climate hazards on all their investment portfolios. These were mostly physical assets spread globally. The only risk they could calculate was precipitation and heat as those are the only two data available to them via satellites.

Following is an image of risk assessment done to CAC40 (french stock market) facilities that are affected by extreme precipitation.


They engaged a company (called four twenty seven) who developed a methodologythat tackles physical risk head on by identifying the *locations* of corporate production and retail sites around the world and their vulnerability to climate change hazards, such as sea level rise, droughts, floods and tropical storms, which pose an immediate threat to investment portfolios
[Source of this story](https://427mt.com/2017/11/08/physical-climate-risk-in-equity-portfolios-white-paper/)
At COP23 Four Twenty Seven and Deutsche Asset Management jointly released a report featuring a new approach to climate risk management in equity portfolios. Measuring Physical Climate Risk in Equity Portfolios showcases Four Twenty Seven’s Equity Risk Scoring methodology, which identifies hotspots in investment portfolios by assessing the geographic exposure of publicly-traded companies to climate change.

This comprehensive, data-driven scoring effort culminates in a composite physical risk score that allows for comparison and benchmarking of equities and indices. This integrated measure provides a point of entry to understand and address climate risk, engage with corporations and identify risk mitigation strategies. “This report is a major step forward to addressing a serious and growing risk that investors face. To keep advancing our efforts, we believe the investment industry needs to champion the disclosure of once-in-a-lifetime climate risks by companies so we can assess these risks even more accurately going forward,” said Nicolas Moreau, Head of Deutsche Asset Management.

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August-September 2017 - 1st time in 166 years, US saw Cat4 hurricanes. destruction worth $190 Billion.

South Asia, same year, same time, August 2017, witnessed floods that affected 16 million people, over 1200 dead. $80 Billion in looses. Mumbai suffered its worst flooding since 2005. 80% of crops in Nepal damaged.

Came 2018, 40% of world's coffee affected due to drought and extreme rainfall.

Well, we've always have had natural disasters, however, they are now becoming more frequent, more intense and most importantly less predictable - thanks to lack of data.

[World economy set to lose up to 18% GDP from climate change if no action taken, reveals Swiss Re Institute's stress-test analysis](https://www.swissre.com/media/news-releases/nr-20210422-economics-of-climate-change-risks.html)

New Climate Economics Index stress-tests how climate change will impact 48 countries, representing 90% of world economy, and ranks their overall climate resilience

Expected global GDP impact by 2050 under different scenarios compared to a world without climate change:
-18% if no mitigating actions are taken (3.2°C increase);
-14% if some mitigating actions are taken (2.6°C increase);
-11% if further mitigating actions are taken (2°C increase);
-4% if Paris Agreement targets are met (below 2°C increase)

Economies in Asia would be hardest hit, with China at risk of losing nearly 24% of its GDP in a severe scenario, while the world’s biggest economy, the US, stands to lose close to 10%, and Europe almost 11%

Look, the data goes on! there is a to of such terrifying statistics.

**So whats the real problem?**
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## The REAL problem - Lack of DATA!

I am not talking about APIs again! I m talking about usable, actionable, relatable, comprehendable, valuable information. People who are affected don't want raw data on which they will run their models to predict climate change, however, they want a "predicted, analyzed, verified" "INFORMATION" or this is newly coined as "INTELLIGENCE"

This is validated by the guys who invested in Cervest and their entire team as he says "The problem is also this: while understanding climate risk and the related pressures on capital is becoming critical to the way enterprises, producers, and governments operate, there is a large gap between climate science data and the individual risks faced by asset owners and those that price risk on assets. In other words, it’s immensely challenging for asset owners and managers to make sense of, and take decisions from, whatever data we do have."

---

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  rankdir=RL

  graph [ fontname="Source Sans Pro", fontsize=20 ];
  node [ fontname="Source Sans Pro", fontsize=18];
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  subgraph core {
    c [label="Lack of data"] [shape=box]
  }
  
  c -> sync [ltail=session lhead=session]

  subgraph cluster1 {
     concentrate=true
    a [label="Climate data N/A"] [shape=box]
    b [label="Business data"] [shape=box]
    sync [label="model" shape=plaintext ]
    b -> sync  [dir="both"]
    sync -> a [dir="both"]
    label="Prepare for Climate Risk"
  }
}

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### Regulatory requirement
Investors and regulators call for disclosure. In June 2017, the Taskforce released its guidance for investors and corporations on better assessing and disclosing climate risk. They call it "Tragedy of the Horizon"

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### Emissions
US Global Change Research Program Climate Science Special Report stated that it is extremely likely that human activities, especially emissions of greenhouse gases, are the dominant cause of the observed warming since the mid-20th century

Businesses, administrations and investors lack the tools to anticipate, quantify, and respond to the oncoming impacts of extreme weather events on their equity portfolios.Dozens of sophisticated climate models run by the world’s leading academic institutions forecast changes in the earth’s systems, but their outputs are extremely complex and require specialized programming skills and computers to access and process.

Raw climate data comes by the terabytes and comprises dozens of indicators that provide a detailed picture of forecasted changes to the planet’s physical systems, but that do not speak to impacts on human and economic systems.

# THE ONE PAGER

Climate change is guaranteed because emissions are already in the atmosphere. Climate change is linear.

Trillions of dollars of capital in threat. Need for readiness and disclosures is imminent. However, the data is complex, large, non-existent, poor resolution or its not available in a click of a button thing.

Go back to the year 2000. How were you booking cabs? what you thought of the cab market? Complex, tough, not easily available at a click of a button yeah?
How has that changed now? Cab available at the click of a button?
Would you be happy then if someone had simply given you the locations of all the cabs and their availability or a app called "Uber" that solved this problem?

Not comparing what we do to Uber or anyone else, We will do something better in our own way that for the climate problem to businesses, investors and administrators alike.

Now:

[According to this paper ](https://unfccc.int/files/adaptation/workstreams/loss_and_damage/application/pdf/attributingextremeevents.pdf) GHG emissions are directly responsible for PEA (Probabilistic Event Attribution).

But no one has that much GHG data except columnar large scale old AODs (Aerosol optical depths) and statistically estimated data. The article says the GHG confirms the probability however there is still uncertainty. Guess why? Lack of GHG data!

Thats how we are being different and better already because we have some data, plus, with the sensor network we can do better! We also can model it better.

Our strength - **DATA & MODELLING DATA**
### ICD:

1. Time - we will stay ahead of time as we have 25+ years old data, we have better models
2. Proprietary data - Adding GHG emissions for probabilistic event attribution means better accuracy
3. Partnerships
4. Sensor Network

Now Next steps,
Pick one area/idea to research (only climate event attribution). For ex. Heat/temperature or precipitation etc
Literature survey - take stock of existing models in the market. Note the benchmark.
Data gathering > EDA > Feature Engineering > Data Modelling for novelty > Model Evaluation and assessment

**one pager ends**

## What is the big problem statement?

- Climate must be at the core of every decision for every business on the planet, however there is lack of accurate data.
- Despite Covid-19-related economic shutdowns, and more commitments to decarbonize our economy, climate-related extreme events accelerated as we experienced a record year of heavy storms, extensive flooding, severe droughts, widespread wildfires and extreme heat waves.
- Economic losses resulting from those damages add up to hundreds of billions of dollars.


## Extreme Heat


Future loss assessments point to the existential threat that climate change poses to our global economy. 200 of the world’s largest companies estimated that climate change would cost them a combined total of nearly US$1 trillion in the case of non-action. Global reinsurer Swiss Re, which developed a leading climate practice, asserted that “climate change poses the biggest long-term threat to the global economy”. If no mitigating action is taken, global GDP could shrink by 18% in the next 30 years.

## Flood Risk

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### Solution
To build a resilient economy in the face of our accelerating climate crisis, we need actionable “Climate Intelligence” that helps us understand and anticipate climate volatility and all of its potential impacts.

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### Who is most affected by this problem?
1. BFSI
2. Supply Chain
3.

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### Who is most affected by this problem?
#### Product

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1. Ambee PlanetGlance (climate data)
2. Ambee ClimaStack ()
3. Ambee PARA (climate risk data)

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### Product Features

* Understand the opportunities and risks our changing climate presents to manufacturers and supply chains now and in future.

* Get access to personalized Climate Intelligence that empowers you to protect your physical assets and strengthen your supply chains – all backed by accurate climate essential variables and a cutting-edge climate science.
* Embed climate intelligence into transaction-level decisions with Ambee ClimaStack
* Banks, Asset Managers and insurance providers can now use the climate risk capabilities of PlanetGlance to integrate cutting-edge climate modeling research into decision making.(CHMC use case)
* Use the Ambee-PARA (Physical Asset Risk Assessment) forecast and immediate risk for credit decision making processes to correctly reprice the risk
* Optimize current portfolios and generate benchmarks for target investee instruments based on their underlying climate volatility
* Evaluate the financial impact of differing ‘climate shock’ stress testing scenarios

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List of Climate risks that are low hanging fruits. Some for short term and some for long term. We have already done wildfires in this list.


We will check heat stress or extreme precipitation to start with. Then we need someone from supply chain or business operations or investments to give us a business logic to whom the heat stress or precipitation is a risk. We will then later on build for their use case.

Timelines: