A Flexible Approach to Mastering Climate Risk Scenario Analysis

Facilitate Scenario Selection. Assess Financial Impact. Communicate Effectively. 

Assessing and managing climate risk needs a forward-looking approach to perform adequate analysis on both assets and liabilities. This explains why scenario analysis is at the forefront of understanding the financial impact of climate risk.

Moody's Analytics Climate Pathways solution offers a forward-looking scenario modeling approach that helps insurers quantify the financial impact of physical and transition risk. Enabling selection of the right scenario approach for the complexity and uniqueness of your business model. Powered by our award-winning Scenario Generator, the solution is built on a unique combination of many years of scenario modeling, climate science, and deep insurance industry expertise. Climate Pathways offers insurers the necessary rigor and flexibility to confidently generate actionable insights and progress their level of climate modeling sophistication to adapt to current and future regulatory requirements and forward-looking financial disclosures.

Using Climate Pathways

Own Risk and Solvency Assessment (ORSA)

Confidently assess and quantify the financial impacts from physical and transition risk, using different assumptions and scenarios relevant to your business. Translate long-term scenarios to short-term stresses. Build credible recommendations to the board.


Strategic Asset Allocation (SAA)

Explore changes to your business’ Capital Market AssumptionsQuantify the financial impacts on asset classes and market risk-factors from physical and transition risk. Present credible recommendations to internal and external stakeholders.


Forward-Looking Financial Disclosures

Analyze your financial exposure to climate risk by navigating the impacts of different climate assumptions and scenarios relevant to your business. Identify the material financial impacts of physical and transition risk and build robust, transparent climate-related financial disclosures to respond to requirements such as those from the TCFD, ISSB and CSRD.


Why Moody's Analytics?

 » Moody's unique combination of deep insurance domain expertise, climate knowledge, and decades of scenario modeling and calibration experience.
» Flexibility to vary the climate assumptions and scenarios to see the impact of different choices and build confidence with robust recommendations.
» Ability to convert long-term climate projections into short-term impacts to better understand material impact and avoid missing key risks.
» Plug and Play with existing modeling infrastructure. Produce financial variables and asset class returns ready to feed into current valuations systems.
» Align assumptions with in-house views and build consensus across business functions.
» Use consistent climate assumptions for modeling asset and liabilities to assess the full balance sheet impact of different climate scenarios.
» Exhaustive documentation to help manage internal and external scrutiny.