By Dr Nick Wood and Kate Mackenzie - part of UNSW's Global Climate Change Week, Oct 2016, in a session jointly presented by UNSW Business School's Centre for Energy and Environmental Markets, and the ARC Centre of Excellence for Climate System Science.
Banks: Keep enough cash/equivalents on hand so that in event of defaults, you remain solvent – ie, can pay out your depositors on demand
Investors: Risk is mostly within the investee company, which in turn is affected by many factors…
Often done by agents, or more accurately, a whole chain of agents. Incentives for those agents to stay within the pack
This is key… INFORMATION with which investors can make decisions, and timely & full DISCLOSURE of that information.
Financial insts are the critical infrastruture to an economy: thet match savers and borrowers, and (in case of insurers particularly) they manage risk
If you ask about climate risk – that’s where you’ll be referred.
The map at right shows predicted changes in the annual number of days of extreme rainfall (defined as rainfall totals in excess of the historic 98th percentile) across the United States by 2041-2070 as compared to 1971-2000 if greenhouse gases continue to increase at a high rate (A2 scenario). By mid-century, some places could experience two or more additional days per year on which the rainfall totals exceed the heaviest rains historically experienced in the area.
CC is often seen as a gradual, steady, incremental shift. We know more about effects on “trends” than on volatility/variance
[KM – look up research indicating CC in #1 concern for 30% of agricultural business]
[Mention Moody’s / S&P ?]
Genscape flies helictopters with heat-sensing cameras over oil storage facilities at Cushing, Oklahoma. The amount of oil in storage here is a key factor in price movements for the West Texas Intermediate benchmark. The company also monitors ships movements, and electricity consumption via sensors near transmission lines, etc.It charges $90k a year for its reports.
This image from another company called RS Metrics
[Get CoastAdapt image for Collaroy]
Collaroy coastadapt image shows very little – but look at the damage
This is Nick’s diagram – so this is how a nuclear physiciast thinks about the problem
This is how Bank of England staff think about the problem
Disclosure of downside risks is NEVER done voluntarily.