Risk Scores for banks
A simple, powerful tool for managing flood risk, anywhere on the planet under any climate scenario
Fathom’s Risk Scores support banks where:
- You need access to large amounts of complex data
- You require consistent analysis across large regions or portfolios
- Analyzing the data is time-consuming and requires in-house GIS specialists
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Assessing flood risk is becoming increasingly challenging for banks. Risk Scores can help
Most bank leaders acknowledge that climate change poses a serious financial risk to their business. As extreme weather events such as floods become more frequent and intense, the impact on industry, agriculture, buildings and communities worldwide becomes more severe.
Because banks have assets and customers in every industry and on every continent, the potential exposure to flood risk is huge. Added to this is growing pressure from regulators and investors who are demanding more transparency around risk exposure.
That’s why it’s crucial for every bank, big or small, to build flood risk into their risk-management framework. However, understanding flood risk is a major headache for banks. The three big challenges are:
- You need access to large amounts of complex data
- You require consistent analysis across large regions or portfolios
- Analyzing the data is time-consuming and requires in-house GIS specialists
Fathom’s Risk Scores remove these obstacles. They are an easy-to-understand metric that gives you an instant view of risk, helping you make faster, more informed risk-management decisions.
How Risk Scores help banks
Risk Scores make it as easy as possible to rapidly assess flood risk at scale
Developed out of Fathom’s award-winning Global Flood Map, Risk Scores are underpinned by the most robust and comprehensive set of hazard data in the world. They take vast amounts of detailed information contained in the map and distill it into one powerful metric.
They are an efficient, consistent method of figuring out how flood risk varies from one location to another. Risk Scores allow you to instantly rank the financial risk from flooding of an asset and categorize that risk against your appetite. You can analyze a single asset or your entire portfolio, for any major flood peril, time horizon and climate scenario.
This supports banks with:
Investment due diligence
Understand at a glance how flood risk can impact the value of an investment over time.
Portfolio profiling
Quickly assess the risk of an asset and use average annual loss information to decide which assets need divesting.
Long-term portfolio management
Plan and mitigate possible risks with scores for any future year and climate scenario up to 2100.
Benefits of Fathom’s Risk Scores
Multiple perils
Choose between several sub-peril combinations, including single peril, inland or all perils
Climate data
Flood hazard data for any combination of future year and climate scenario up to 2100
Flexible access
Access how you want: via Fathom API, Fathom Portal, direct provision, or partners
At-a-glance metrics
Two types of scores: Relative Risk and Risk Category
Simple but powerful
Distills information from depths at a range of frequencies, depth/damage relationships, defense fragility and standards of protections into easy-to-consume scores
Robust and reliable
Fathom’s methodology is underpinned by the science of flood modeling. It is transparent and peer-reviewed in the most authoritative academic journals
Risk Scores explained
Relative Risk
Relative Risk represents how much of an asset’s value is at risk. To calculate this score, we take an arbitrary asset, give it a nominal value of $1,000,000, and move it around every grid cell on the planet to assess its flood risk. The result is a number from 0 to 1,000,000, which tells you the annual average loss (AAL) for a uniform exposure type at any given location.
Risk Category
This metric categorizes risk on a scale of 1 to 100. Taking relative risk along with information on locations proximate but not inside floodplains, we assign a category ranging from 0 (least risk) to 100 (maximum risk). You can then rank the categories as low, medium and high, or in any way you want, according to your risk appetite. Grid cells outside the 1000-year flood but within 500m are Risk Categories 1 to 5, while those inside the 1000-year flood are Risk Categories 6 to 100.
Fathom’s Risk Scores are part of Fathom’s complex product portfolio. Explore the full Product Stack to learn how Fathom’s data work together, or explore more of our products below:
