Climate Valuation has taken steps to assess the analytical performance of its Climate Risk Engines against the extreme flooding events taking place across Eastern Australia in recent times.
How does the Climate Valuation analysis work?
Climate Valuation’s analytics brings together information on property design, its surrounding environment, and extreme weather hazards under various climate change scenarios, to assess the probability and scale of financial loss. This includes flood maps and rainfall information.
How were the recent floods reflected in Climate Valuation results?
Using the recent events we have considered where the models have represented flood risks and where they have not. We have particularly focussed on any areas where flood risk projections have been low in the Climate Valuation data (resulting in an A rating) but severely impacted in recent events as a means of checking system operations and data quality. We have, for example, undertaken a deep test into the extreme flooding witnessed in the Lismore area of New South Wales over the first 3 days of March 2022.
This Lismore test found Climate Valuation’s detailed address level data has detected non-trivial flood risk in many of the areas affected by this recent flooding event. However, using our overall ‘high (C rating)’, ‘moderate (B rating)’ and ‘low (A rating)’ rating thresholds, the report may not identify properties impacted by this event. This is because, in certain locations, flood mapping data places these events at an extremely low probability of occurrence (1-in-1,500 year probability). Thus, the annual average losses modelled in these areas are below the threshold of a high-risk rating.
Does that mean that Climate Valuation data is incorrect?
Based on the current ground truth analysis, Climate Valuation is confident that our current methods are working as they were designed to. Low ratings at some flood-affected addresses are not errors, but a consequence of the data, methods and reporting thresholds used.
Due to the inherent uncertainty in assessing climate risk over large spatial and time dimensions, we strongly encourage customers to consider a range of possibilities when assessing climate risk to property.
How will flooding risk be assessed moving forward?
We regularly review our methods to ensure they reflect the latest scientific and climatological information available. Based on this analysis we will be updating our methods to ensure properties that may be exposed to flooding of any probability can be identified by our customers. This will help avoid any ‘false positives’ or under-appreciation of risk to these types of rare flooding events.
Climate Valuation will continue to update customers of any changes to our methods to ensure consistency and comparability with historical analyses.