Understanding the financial risks of climate change

The past decade had the largest natural disaster impact footprint of any decade on record, and in 2019 alone the global economic losses from natural disasters exceeded USD 232 billion. These events not only cost money to recover from but also reduced market earnings. In a recent S&P study (PDF 2.6MB), CFOs and CEOs reported that 6% of annual earnings were affected by extreme weather and climate events. Businesses must factor climate change into their decision-making — but how do they go about doing that? Enter: The Climate Service.

Factors include everything from physical impacts like wildfires and coastal flooding and storms to non-physical impacts like our response to climate change, potential policy, carbon pricing, litigation risk and more. Our platform analyzes all these factors because investors realize that understanding and quantifying climate risk and opportunity affords competitive advantage. It is now a necessity — these impacts are material.

James McMahon, CEO, The Climate Service

The Climate Service (TCS) is on a mission to integrate climate data into financial decision-making. The TCS Climanomics® platform helps organizations understand, quantify and mitigate their climate risks in order to build resiliency and reduce financial losses. With urgent and escalating demands from the marketplace, TCS chose to embark on an IBM Garage experience and adopt the IBM open-source cloud platform to fast-track the scaling of the Climanomics platform.


Startup speed, enterprise scale

Through the IBM Garage, TCS gained access to the full breadth of IBM expertise and products, including Enterprise Design Thinking™, IBM Cloud and the Red Hat OpenShift Container Platform. Leveraging proven agile, user-focused practices, a dedicated end-to-end team of designers, developers and architects began by working with TCS to build a business opportunity statement to align on the key goals: improve overall user experience on the Climanomics platform, modernize existing architecture and data management, and ultimately enable continued revenue for TCS.

From there, teams met at the IBM Garage in London for a three-day design and architecture workshop to problem-solve in a collaborative environment with a mix of designers, architects and developers. The output was an agreed-upon, defined minimum viable product (MVP) for the re-architected platform, with the next eight weeks spent in user testing, development and modernization. Throughout the process, IBM and TCS teams worked in close collaboration through daily standups, weekly retrospectives and iterations, and eXtreme and pair programming — both in person and virtually.

Following the IBM Garage Methodology, TCS moved from defining the business need, to building working and tested software, to scaling a solution to meet the escalating climate demand.


Gargantuan problem, gargantuan amounts of data

Climate risk analytics requires a vast amount of data — petabytes of data and thousands of equations — which necessitates an efficient cloud architecture to be able to manage and quickly access information. To scale its platform, TCS adopted the IBM open-source cloud platform, moving mission-critical workloads to hybrid architecture across IBM Cloud and Red Hat OpenShift. The result: improved usability for clients, more sophisticated integrations, and streamlined workflows. 

When the world needs technology at scale, applied to a really hard problem, they call IBM. And that's exactly what we did.

James McMahon, CEO, The Climate Service

As climate change continues to produce escalating financial risks, the Climanomics platform empowers decision-makers to embed climate risk insights into decision-making. These insights maximize resilience and help investors, corporations and communities prepare for what lies ahead: the biggest challenge facing the world.

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