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Finity and Ortec Finance join forces to enhance climate risk analysis for Australian investment portfolios
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Finity and Ortec Finance join forces to enhance climate risk analysis for Australian investment portfolios
In a significant move aimed at bolstering the financial sector's ability to tackle climate-related risks, Finity, Australia's leading independent actuarial and strategic analytics firm, has announced a partnership with Ortec Finance, a global leader in investment risk management solutions. This collaboration is set to provide advanced quantitative climate scenario analysis to Australian financial institutions, enhancing their ability to assess, manage, and disclose climate-related financial risks.
Finity and Ortec Finance join forces to enhance climate risk analysis for Australian investment portfolios
In a significant move aimed at bolstering the financial sector's ability to tackle climate-related risks, Finity, Australia's leading independent actuarial and strategic analytics firm, has announced a partnership with Ortec Finance, a global leader in investment risk management solutions. This collaboration is set to provide advanced quantitative climate scenario analysis to Australian financial institutions, enhancing their ability to assess, manage, and disclose climate-related financial risks.
The partnership is timely, as climate change is increasingly influencing financial and insurance risks. From extreme weather events to shifting regulatory and market pressures, the need for comprehensive understanding of these risks is more critical than ever for organisations seeking to manage asset and liability risks while maintaining long-term portfolio resilience.
The collaboration will leverage Ortec Finance’s globally recognised climate models, integrating them with Finity’s expertise in climate scenario analysis and sustainability disclosures. Finity will utilise the Ortec Finance Climate Scenarios, a core component of Ortec Finance’s ClimateMAPS—a climate scenario analysis solution developed in partnership with Cambridge Econometrics. This integration aims to align model outputs with client portfolios, projecting investment returns and asset values under various climate scenarios.
"Integrating climate risk management is essential to strengthening broader risk management frameworks," said Dr Bronwyn Claire, Asia-Pacific Lead, Climate Scenarios & Sustainability at Ortec Finance. "We are delighted to partner with Finity to support their clients with understanding the financial impacts of climate change and making more informed and resilient decisions."
The partnership builds on Finity’s extensive experience in modelling insurance liabilities, enhancing its capabilities to offer clients a more comprehensive view of climate risks across assets and liabilities, and their impacts on financial performance and positions. Finity has already begun employing Ortec Finance’s models to aid leading Australian insurers in quantitatively measuring and disclosing the financial impact of climate change, in anticipation of the forthcoming mandatory AASB S2 climate standards. Ortec Finance’s extensive coverage of climate scenarios, asset types, and global markets empowers clients to evaluate how their strategic asset allocations may perform under future climate scenarios, develop mitigating strategies, and identify investment opportunities to enhance shareholder value.
"Climate scenario analysis is a growing priority for financial institutions. This partnership significantly raises the capabilities we can deliver to our clients on their investment portfolios," stated Jon Tindall, Principal at Finity and leader of Finity’s Investments and Capital Markets practice. "Ortec Finance is regarded as the leader in complex climate scenario analysis of financial risks, and by combining their models with Finity’s investment, insurance, and banking expertise, we can provide clients with a robust, forward-looking view of climate risks across both assets and liabilities."
The Ortec Finance Climate Scenarios, a key component of ClimateMAPS, are a suite of deterministic climate scenarios developed in-house, in collaboration with Cambridge Econometrics, to assess the financial impact of climate change. These scenarios are based on non-equilibrium modelling (E3ME) of the low-carbon transition through policy and technology innovation. The tool also utilises a proprietary extreme weather modelling tool to assess acute physical risk impacts. In combination with Ortec Finance’s stochastic financial scenario set and independent Economic Scenario Generator, it generates economic and financial variables for all asset classes, geographies, sectors, and conventional and low-carbon benchmarks. These variables incorporate pricing-in dynamics and financial market sentiment shocks.
This strategic partnership between Finity and Ortec Finance underscores the growing importance of climate risk analysis in the financial sector. As organisations worldwide grapple with the multifaceted challenges posed by climate change, the integration of advanced climate models with expert risk analysis offers a critical tool for navigating the uncertain future.
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