GRA · Climate and Nature Financial Risk

Spatial financeWhere capital meets hazard, exposure and transition

Spatial statistics and geostatistics for climate and nature financial risk

Spatial statistics links hazards and ecosystems to the locations of assets and collateral. On this platform it supports physical and nature risk screening, aggregation of location-specific risk to portfolios and treatment of spatial uncertainty.

01Register

Spatial statistics and geostatistics for climate and nature financial risk on the record.

Method recordSTEM method
  1. MethodSpatial statistics and geostatistics
  2. Applied inClimate and Nature Financial Risk
  3. Canonical pageSTEM Commons
02Application

What spatial statistics and geostatistics does here.

Spatial statistics and geostatistics analyse data that vary across space, accounting for spatial dependence. They estimate values at unsampled locations and test for spatial patterns. In climate and hazards, biodiversity and nature and capital markets and investment, spatial statistics produce continuous hazard and exposure surfaces with uncertainty. They reveal geographic clustering of risks and vulnerabilities across sectors. The canonical description is on the STEM Commons.

Geolocating exposures

Addresses and asset records are geocoded and matched to hazard and ecosystem layers, with match rates and positional error reported.

Aggregating location risk

Site-level risks are aggregated to portfolio level with spatial correlation, so concentration in one region is visible.

Resolution sensitivity

Results are compared across hazard map resolutions to show how the spatial scale chosen changes exposure estimates.

03Spatial finance

Assets on the grid, and the portfolio they make.

Where a portfolio's assets sit, and how much of its value is most exposed. Hypothetical assets, not an assessment.

Sixteen assets at real towns, and the share of portfolio value in the most exposed places.Hypothetical assets and design scores, not advice.
04Data

What the method consumes.

Datasets and records used by spatial statistics and geostatistics on this platform, with the role each plays and the label its values carry. Sources are listed in the source register.

DataRoleLabel
Hazard mapsPhysical exposureMODELLED
Asset location recordsExposure geographyREPORTED
Biodiversity layersNature sensitivityPublished statistics
05Monitor

Spatial model.

The screen a team would use to follow this method: its measures, states and decisions. Names are examples and values are illustrative.

Spatial model: the screen's structure, terms and states for Climate and nature financial risk.Example names and illustrative values; a design, not a record or a live system.
06Validation

How results are checked.

Predictions are tested using spatial cross-validation that respects dependence. Uncertainty maps are compared with independent observations.

CheckHow it is done
Geocoding accuracyMatch rates and errors are reported
Spatial correlationAggregation accounts for correlated losses
Scale effectsResults are tested across resolutions

Results depend on the scale and zoning of analysis. Sparse or clustered sampling limits prediction in unsampled areas.

07Scenario model

Transition and physical risk on a portfolio.

Three scenario families after the NGFS framework move a sector portfolio through carbon costs and warming damages; the transmission view follows the losses to lenders, investors, public finances and households. Scenario: named assumptions about the future, not a forecast. The map on this page shows Southeast Asia; the model itself is not tied to a place.

Controls

Carbon price at the horizon, orderly path
200 per tCO2
Delay before a disorderly transition
50% of horizon
Cost passed to customers
50%
Warming today above pre-industrial
1.30°C
Warming per decade, current policies
0.25°C
Damage coefficient
0.24% per °C²
Years ahead
25 years

Readouts

Worst scenario at the horizon
−33.6% of value
Numbers, methods and sources
YearOrderly transition (% value)Delayed, disorderly transition (% value)Current policies (% value)
0−0.38−0.38−0.38
3−2.87−0.53−0.67
6−5.36−0.68−0.97
9−7.84−0.84−1.27
12−10.33−0.99−1.57
15−12.82−7.12−1.87
18−15.31−15.05−2.17
21−17.80−23.00−2.48
24−20.29−30.94−2.79

Methods

  1. Climate scenario families NGFS (2023), Climate Scenarios for central banks and supervisors, Phase IV
  2. Climate stress test of the financial system Battiston and others (2017), Nature Climate Change 7
  3. Damage function Nordhaus (2017), Revisiting the social cost of carbon, PNAS 114
  4. Transmission channels BCBS (2021), Climate-related risk drivers and their transmission channels
  5. Uncertainty fan (parameter Monte Carlo) Spiegelhalter, Pearson and Short (2011), Visualising uncertainty about the future, Science 333
  6. One-at-a-time sensitivity (tornado) Saltelli and others (2008), Global Sensitivity Analysis: The Primer, Wiley

Data

The model runs on the teaching values set by the controls. To calibrate it for a place, read it against these admitted layers and series, which this page's map can draw:

  • Urban extents Natural Earth
  • Seaports Natural Earth
  • Past year, daily temperature (ERA5 via Open-Meteo) Open-Meteo.com (CC BY 4.0), Copernicus ERA5 (C3S/ECMWF) · register open-meteo.public-pages
  • Surface air temperature, daytime (AIRS) NASA AIRS · register nasa.gibs.context-live-layers
Transition and physical risk on a portfolio. Illustrative teaching model: it runs on the values set by the controls, not on measured data. Methods: Climate scenario families (NGFS (2023), Climate Scenarios for central banks and supervisors, Phase IV); Climate stress test of the financial system (Battiston and others (2017), Nature Climate Change 7); Damage function (Nordhaus (2017), Revisiting the social cost of carbon, PNAS 114).
09Twin and cascade simulator

Trace a shock to the balance sheet.

Assembled from the Nexus Standards area profile Climate risk standards: the shocks it names, the systems and sectors that carry the loss, the controls that dampen it and the data that observe it. Pick an initiating shock and step through the cascade to see which exposures it reaches and where losses could concentrate. The Map view places the run on an example geography with open data. Every weight is a stated assumption. An exercise, not a forecast, a valuation, a rating or investment advice. To model a place of your own choosing, open the full System Builder.

Hazards

  • Sea-level rise
  • Coastal flood (set off downstream)
  • Storm surge (set off downstream)
  • High-tide flooding (set off downstream)
  • Coastal erosion (set off downstream)
  • Saltwater intrusion (set off downstream)
  • Estuary flood (set off downstream)
  • Coastal habitat squeeze (set off downstream)
  • Wetland loss (set off downstream)
  • Mangrove loss (set off downstream)
  • Groundwater flood (set off downstream)
  • Climate-driven migration and relocation (set off downstream)
  • Mass displacement (set off downstream)

Controls

  • NS-0 Constitution and principles
  • NS-1 The UNI and the artefact catalogue (grammar v0.2: domain, sector, region and environment segments)
  • NS-3 Risk record UNIs (grammar, legacy crosswalk, allocation authority)
  • NS-3b Dataset and product metadata profile (STAC, DCAT, PROV-O)
  • NS-9 Contextual UNIs (deployments, instances, programme instances)
  • NS-11 Verification and monitoring (evidence, attestations, zero-trust conformance observation)
  • NS-14 Conformance and crosswalk to external standards
  • NRS-H65 Hazard family: Planetary boundary transgressions (NHS-1 planet.boundary)
  • NRS-H62 Hazard family: Compound and multi-hazard events (NHS-1 sys.compound)
  • NRS-H71 Hazard family: Deep-time and cosmic catastrophes (NHS-1 planet.deep-time)
  • NRS-H79 Hazard family: Mental health crises (NHS-1 health.mental)
  • NRS-H75 Hazard family: Climate-sensitive illness (NHS-1 health.climate-sensitive)
  • NRS-H7 Hazard family: Large-scale circulation anomalies (NHS-1 atmo.climate-mode)

Observation

  • ERA5 reanalysis (Copernicus Climate Data Store) (listed for reference)
  • CMIP6 climate projections (Copernicus Climate Data Store) (listed for reference)
  • NGFS Scenario Explorer (listed for reference)
  • INFORM Risk Index (listed for reference)
  • Number of deaths, missing persons and directly affected persons attributed to disasters per 100,000 population
  • Total greenhouse gas emissions per year
  • Direct economic loss attributed to disasters in relation to global GDP

Example geography

  • Pacific Island states: 150 hexagonal cells
  • Night lights tonight, outages (VIIRS Day/Night Band), NASA GIBS
  • Surface water through cloud, 30 m (OPERA DSWx-S1 radar), NASA GIBS
  • Rain rate, last half hour (IMERG), NASA GIBS
  • Vegetation disturbance alerts, 30 m (OPERA DIST-ALERT), NASA GIBS
10Stewardship

Who maintains the method.

Space and Earth Observation stewards spatial statistics and geostatistics for the Consortium and reviews how it is applied across platforms.

11Sector signature

Where exposure in spatial statistics and geostatistics for climate and nature financial risk travels.

The sectors that carry exposure in spatial statistics and geostatistics for climate and nature financial risk and how a loss in one passes to the others, across portfolios and public finances.

Select corners · hover lines6 / 15 relations

Signature

Biodiversity and its partners

Biodiversity gives pollination and soils to food (0.6), watershed regulation to water (0.5) and zoonotic spillover and medicines to health (0.4).

W · E · I · F · H · B

Sectors
4 of 6
Relations
6 of 15
Coupling
0.46 share of total

Strongest relations in play

  • Food → Biodiversity · land conversion0.6
  • Water → Food · irrigation0.8
  • Water → Biodiversity · environmental flows0.6
  • Food → Health · nutrition0.7
Teaching values for a typical city-region, not measurements for any place. Coupling is the summed strength of the relations in play, as a share of all fifteen.
13Exposure, loss and capital

What it means for exposure, loss and capital.

The exposure, loss, scenario and capital views a risk officer, supervisor or ministry of finance would ask for, with the frameworks they report against. Structures follow supervisory and actuarial practice. Values are illustrative: never prices, ratings or advice.

Scenario pathways

How spatial statistics and geostatistics for climate and nature financial risk could be stressed under the scenario families central banks and supervisors use.

OrderlyDisorderlyHot house world202520302035204020452050highlow
Scenario familyTransition riskPhysical riskWhat a stress test asks
OrderlyEarly, gradual policyLowerCan the book absorb a steady repricing?
DisorderlyLate, abrupt policyLower to mediumWhat breaks under a sudden repricing and credit migration?
Hot house worldLimited policyHigh and risingWhere do physical losses concentrate in collateral and insurance?
Scenario families as defined by the NGFS; the curves are an illustrative combined pressure index, not NGFS variables or forecasts.
NGFS climate scenarios · Network for Greening the Financial SystemIFRS S2 Climate-related Disclosures · ISSBTCFD recommendations · Financial Stability Board TCFDPrinciples for the effective management of climate-related financial risks · Basel Committee on Banking Supervision
14Questions

Questions and answers.

What are the limits of spatial statistics and geostatistics in this field?
Results depend on the scale and zoning of analysis. Sparse or clustered sampling limits prediction in unsampled areas.
How are results checked?
Predictions are tested using spatial cross-validation that respects dependence. Uncertainty maps are compared with independent observations.
Are the values on this page real?
The data names, roles and checks are real descriptions of practice. The canvas shows a design of the method's use, not a run; no result is reported here.
Where else is this method applied?
The canonical method page lists every platform that applies it.
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Global Risks AllianceClimate and Nature Financial RiskFinance and Insurance ReadinessScenario and Stress-Test
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