The market has not yet priced-in climate risks. Now the IMF confirms this. This clearly implies that financial markets are missing a huge cost to companies and prices exposed to investors are at best misleading or at worst plain wrong!
The government’s appointment of Tiff Macklem as Bank of Canada Governor is raising expectations that corporate Canada will face increasing pressure from Ottawa to disclose and address the financial risks of climate change. Riskthinking.ai’s forward-looking scenario tools help corporations price and disclose their climate change-related risks.
The Covid-19 pandemic could be a dry run for future impacts of climate change, with challenging and unprecedented situations requiring rapid and aggressive responses worldwide. A proactive approach to climate change aimed at minimizing such impacts will inevitably involve significant cuts in greenhouse gas (GHG) emissions and investment in more resilient infrastructure. Although current global mitigation and adaptation efforts are proceeding slowly, one emerging strategy could serve as an accelerant: the financial disclosure of climate risk by companies. Such disclosure, if practiced more widely and consistently, could lower the risks of climate change by redirecting investments away from GHG-emitting activities and pinpointing infrastructure that needs to be made more resilient.
Developing scenarios that enable the disclosure of financial risks related to climate change is precisely what we do at Riskthinking. To learn more, visit the Home page or drop us a line: [email protected]
In October 2018, Ron Dembo was driving through an area of burned forest in Northern California.
The CEO and founder of Toronto-based Riskthinking.ai, Dembo had been invited to give a keynote speech at the conference of the California Independent System Operator (CAISO), one of the world’s largest electricity distributors. Dembo had previously built Algorithmics Inc., which became the world’s largest enterprise risk management software provider. He was headed to the conference to discuss a new kind of “risk thinking” that he believes could supplant existing forecasting strategies.
“Every decision we make today affects our future,” Dembo says. “Yet, whether we are a corporation or an individual, our decision-making today is primarily guided by our attempts to forecast our future. Traditional forecasting doesn’t work well, because past data is of minor use in our fast-changing climate reality. Nearly every commercial and non-commercial sector—from finance, insurance, energy and transportation to local and federal municipalities—is affected.”