Vivid Economics Launches Planetrics Climate Risk Management Solution

Planetrics Uses Highly Detailed Analytics to Model and Price Climate Risk for Tens of Thousands of Assets Globally

Vivid Economics, the strategic economics consultancy, announced the launch of Planetrics, a powerful solution that allows financial institutions to quantify, report and manage climate-related risks and opportunities quickly and easily, down to the level of individual assets.

Thomas Nielsen, Planetrics chief executive, said: “Typically, climate risk is not priced correctly. When it comes to climate, we can’t use the past as a guide. We know that the future is going to be different. Our solution gives organizations the ability to assess many possible scenarios, accounting for new technologies, changing climate policies and the physical impacts of temperature increase, so the risk can be priced correctly.”

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The regulatory focus on climate risk is set to grow in 2021, while financial services companies increasingly recognize the need for deep insights, rather than opaque or superficial risk scores, as climate becomes a mainstream element of their risk management and asset allocation strategies. Leading banks, investors and other financial institutions globally are already using Planetrics’ solution to model risks to help meet and exceed the requirements of Task Force on Climate-related Financial Disclosures (TCFD) reporting and the Bank of England’s climate-focused Biennial Exploratory Scenario (BES) stress test next year, for example.

The Planetrics’ solution uses a suite of customizable climate, economic and financial models that allow users to build more climate-resilient portfolios for the long term, protect assets from the effects of climate change, engage with companies in exposed sectors, and identify new growth and investment opportunities. It simulates the impact of climate risks in four major asset classes: equities, debt, sovereign bonds, and real estate.

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The solution also covers both physical risk—for example, the extreme weather events central to the pricing of risk by insurers—and transition risk, such as how government policy and incentives on electric vehicles affect the shares of carmakers and their ability to service their debts.

Jason Eis, executive director of Vivid Economics and chairman of Planetrics, said: “There is no excuse for financial institutions not to take climate risk into account. Not only do the new regulations make it a fiduciary duty, but it also makes financial sense. By identifying risk properly, our users will quickly spot opportunities the rest of the market has not yet seen.”

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