Aon launches new climate risk advisory for financial institutions

Global re/insurance broker  Aon has unveiled a specialised climate risk advisory unit that provides physical risk solutions aimed at assisting financial institutions, public sector entities and firms with large real estate holdings in mitigating climate-related financial risks.

The new unit will provide forward-looking diagnostics for a range of climate scenarios, applying climate hazard data to individual asset locations to understand key geographies at risk today and in the future.

The climate advisory aims to build a holistic, end-to-end approach to risk modeling and management, from scoping the exposure to communicating and acting upon strategies.

More than 400 natural catastrophes caused $313 billion of damage worldwide in 2022. As climate change drives new extreme weather records, organisations need to better quantify the impact of climate risk, Aon explained.

The team combines catastrophe and climate change models from Aon’s Impact Forecasting and third-party vendors, with analytical expertise from across Aon’s capital, climate, and credit, specialties, to offer clients a better informed and customised view of risk. It also draws upon Aon’s 14 global academic collaborations, whose emerging climate research provides an independent view of risk and informs the development of the firm’s catastrophe models. Climate Risk Advisory provides physical risk solutions that are complemented by Aon’s broader capabilities around ESG and the transition to net zero.

Liz Henderson, previously co-head of Reinsurance Solutions’ US catastrophe management team, has been named leader of Climate Risk Advisory, reporting to Joe Monaghan, global growth leader of Reinsurance Solutions.

Monaghan said: “In launching Climate Risk Advisory, Aon recognises how financial institutions may benefit greatly from the catastrophe and climate expertise, modeling and solutions we have developed and honed over several decades for the re/insurance sectors. Financial institutions can now tap our ongoing investment in our Impact Forecasting models and evolving scientific research, which will help them to navigate volatility and build business resilience.”

Henderson added: “I am excited to be leading a team whose insight has become increasingly important to insurers and reinsurers, and can now be effectively applied to a wider set of Aon clients. Our initial focus will be on financial institutions and public sector entities, which have an immediate need to understand their climate risks. Our team takes modeling data and brings it to life with approximately 30 years of experience collaborating with insurer C-suite leaders who manage these issues every day. Our advice goes beyond analysing the results of any individual approach, to helping organisations develop holistic climate risk programs that can navigate the inherent uncertainty in climate change to make better decisions on risk management.”

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