5 May 2023Analysis

Aon creates climate risk advisory team

Aon has launched its climate risk advisory team, with the aim of providing physical risk diagnostics and advisory services to help financial institutions, public sector entities and firms with large real estate holdings to make better decisions about their climate-related financial risks.

Aon said that more than 400 natural catastrophes caused $313 billion of damage worldwide in 2022 and that as climate change drives new extreme weather records, organisations need to better quantify the impact of climate risk.

To help clients meet their reporting and disclosure requirements, reduce risk and drive growth, Climate Risk Advisory 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. 
  • Climate advisory to build a holistic, end-to-end approach to risk modelling and management, from scoping the exposure to communicating and acting upon strategies. 

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. Drawing on a wide range of sources gives clients a highly 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.

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, modelling 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 modelling 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.”