Don’t forget: climate shocks may be good for some assets
Climate stress tests typically consider only some assets – those directly impacted by global warming. Risk managers should think about what happens to those they miss out.
I’m sure we’ve all seen maps like the one below, which depicts the parts of London that are likely to be regularly flooded by 2030. You can easily find other maps showing wildfire risk and heat stress and other factors likely to be exacerbated by the warming climate. The science of this sort of analysis is very solid – the red stain might not be perfect in every regard, but it serves well as an approximation.
A few observations. I’m glad that both the V&A and British Museums will be spared, and I’m impressed that the Victorian Embankment, built in the 19th century, is the only bend in the River Thames that lies outside the stain. An amazing example of future proofing on display right there.