MSCI And Swiss Re Strengthen Climate Risk Management

As part of an effort to deepen the financial sector's physical climate risk management approach, MSCI and Swiss Re Reinsurance Solutions have announced a strategic partnership for delivering detailed, asset-level physical risk insights to financial institutions. This partnership will integrate MSCI’s GeoSpatial Asset Intelligence with Swiss Re’s proprietary natural catastrophe and climate risk data, offering clients a robust toolkit to assess and mitigate physical risks across individual assets, private and public companies, global portfolios, and loan books.

This initiative represents a major leap forward in advancing physical risk management for financial institutions, equipping them with the necessary tools to evaluate and address the evolving landscape of climate-related risks. By combining MSCI’s advanced geospatial data capabilities with Swiss Re’s expertise in natural catastrophe and climate risk insights, the collaboration is poised to provide precise, location-based intelligence that empowers financial institutions to develop more resilient investment strategies.

Richard Mattison, Global Head of ESG and Climate at MSCI, was pleased with the alliance, highlighting the opportunity to revolutionize physical risk intelligence. "Our groundbreaking partnership with Swiss Re represents a giant step forward in furthering physical risk insights for financial institutions. Through the provision of accurate, location-specific intelligence, we help clients confidently manage the changing risk environment and create stronger investment plans," he said.

Swiss Re's participation in the partnership brings a further depth of experience and expertise, with its excellent history of understanding and managing natural catastrophe risks. Ali Shahkarami, Global Head of Property and Casualty Solutions at Swiss Re, highlighted the wider significance of this collaboration. "We are dedicated to bringing accurate data and best-in-class physical risk intelligence to the market.". This collaboration will help financial institutions worldwide, as per our vision of making the world more resilient," he said.

The partnership between MSCI and Swiss Re is at a time when the financial industry is increasingly acknowledging the need to evaluate and manage physical climate risks. These hazards, such as hurricanes, flooding, heatwaves, and other disasters, can have the capability of upsetting the value of investments, assets, and portfolios. With the world bracing for the accelerating impacts of climate change, now more than ever there is a need for accurate and timely data to inform decision-making.

For financial institutions, combining these two significant data sets provides a view of the physical risks of investments that is otherwise difficult to have. Having this capacity to look at these risks at the level of the individual asset provides increased detail, something which can make an enormous difference when trying to figure out what happens to components within a portfolio based on a climate event. Regardless of whether it is a single asset, a private business, a public institution, or a broad global portfolio, financial institutions can now benefit from a single approach to identifying and managing physical risks.

This partnership is especially important to C-suite executives, investors, and financial leaders who want to construct climate-resilient portfolios in a more uncertain climate environment. Financial institutions will be better equipped to evaluate vulnerabilities in their portfolios and proactively take steps to reduce the risk of losses from climate-related events using the information presented by MSCI and Swiss Re.

Along with the primary product of asset-level physical risk intelligence, the partnership will also seek to offer clients the capabilities they need to bring their strategies into alignment with global climate resilience objectives. As climate change remains a threat to economic stability, the financial sector has an important role in leading investments that support the creation of more resilient infrastructure, businesses, and communities. By drawing on the complementary strengths of MSCI and Swiss Re, financial institutions are now able to integrate climate risk into their investment decision-making more effectively, ensuring that their investments are both sustainable and resilient.

Swiss Re has tweeted its enthusiasm for the partnership through social media platforms, noting its potential to revolutionize the way the financial sector evaluates and deals with physical climate risks. "We are thrilled about our partnership with MSCI Inc., which will allow the financial sector to better evaluate and manage physical climate risks by taking advantage of Swiss Re's CatNet® data and other natural catastrophe risk intelligence," the firm posted.

With climate change increasingly being felt, climate risk management for the financial markets will only be on the increase. This alliance of MSCI and Swiss Re is a necessary milestone in promoting the tools and tactics required to confront this new frontier. Investors, companies, and financial institutions can now develop investment strategies as well as strengthen their risk management practices that not only make good financial sense but also withstand the tests of climate change challenges.

Through this collaboration, MSCI and Swiss Re are assisting the financial industry in being more proactive and better informed in managing climate risk, making the industry more ready for the future while leading the global shift towards a more sustainable and resilient economy.