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Physical and transition risk

Physical and transition risk is a business risk.

When uncertainty complicates your risk planning and investment strategies, our robust data and trusted insights empower your business to make better decisions and navigate these risks with confidence.

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How we help

01 Physical and transition risk solutions

Physical and transition risk solutions

Moody’s physical and transition risk solutions help your company to assess the interconnected risks and empowers you to make informed risk management decisions within your existing workflows.

We apply our financial intelligence to deliver insight on macroeconomic and financial market variables (overlaid with physical and transition risk variables) that inform near-, mid-, and long-term risk. We also tailor our analytics to address segment and location-specific pressures, so you can calculate risks and identify opportunities.

Our purpose-built solutions allow you to integrate physical and transition risk insight into your risk management workflows. These include stress testing, risk disclosure and regulatory reporting, investment decisioning, and more.

More about physical and transition solutions in banking
More about physical and transition solutions in insurance
02 Physical risk analytics

Physical risk analytics

Physical and transition risk analytics are robust tools that allow you to financially quantify these risks and opportunities.

Using these tools, you can analyze the potential damage and disruption of chronic and acute physical risks through industry-specific lenses. They also help you understand the financial implications of transitioning to a lower carbon economy.

Our science-informed solutions are delivered through cutting-edge technology. These platforms have intuitive applications that provide a full view of physical and transition risk and enhance each step of the risk management process.

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03 Physical and transition risk models and data

Physical and transition risk models and data 

Our physical and transition risk modeling and data help you seamlessly integrate our expertise on the financial and market impacts of risk into your current risk management workflows, tools, and reporting.

We provide flexible modeling and data options that allow you to layer our insights into established approaches and operationalize physical and transition risk to improve decision making. We also forecast physical and transition risks to the economy for over 70 countries and all U.S. states and metro areas. 

Our robust models integrate future physical and transition risk scenarios, real data on event costs from physical asset damages, on-the-ground engineering assessments after major disasters, structural engineering and design models to measure physical risk, and more.

More about Moody’s physical and transition risk models
More about Moody’s economic scenarios for physical and transition risk
More about Moody’s greenhouse gas emissions data

Explore our ebooks

We offer comprehensive physical and transition risk modeling and data services to seamlessly integrate our expertise into your risk management workflows and reporting, leading to more informed decisions.

ebook

Oct 09, 2024

 Moody's
Insights into mitigation opportunities and challenges associated with the urban heat island effect

Intense heatwaves caused disruptions worldwide, impacting agriculture, businesses, power grids, and public health. Targeted investments can reduce the impacts of heat events and their economic consequences to build more resilient urban communities.

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ebook

Apr 17, 2024

 Moody's
Mitigating wildfire risk: Adaptation investments to reduce financial impacts

Explore how investing in community-level mitigation efforts and promoting resilient building practices can help reduce risk and make insurance coverage more accessible and affordable for both businesses and homeowners in wildfire-prone areas.

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ebook

Oct 19, 2023

 Moody's
Adapting to hurricane risk quantifying benefits for insurers and real asset investors

Areas such as South Florida, continue to see population growth and development expansion despite the high risks associated with rising sea levels and hurricanes. Learn how adaptation measures can help lower susceptibility to hazard-based damages.

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ebook

Oct 19, 2023

 Moody's
Evaluating the future of insurability: A case study modeling the risks and opportunities in the Caribbean to protect island economies

Raising resilience and lowering risk exposure can help preserve economic growth. Learn how integrating physical risk, hazard exposure, and vulnerability data into catastrophe modeling helps guide risk reduction investments.

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Who we help

01 Banking

Banking

Our solutions help banks incorporate a full view of physical and transition risk into their workflows. The result: effective risk management strategies for greater resilience and growth.

Banks use our data and analytics to evaluate the impact of physical and transition risks on creditworthiness and the likelihood of default for credit exposures.

Our physical and transition risk solutions encompass loan decisioning, portfolio planning and stress testing, along with disclosures and regulations.

More on banking
More on physical and transition risk in CRE
02 Insurance

Insurance

Our physical and transition risk solutions empower insurance providers, brokers, and reinsurers to assess interconnected physical and transition risk across the life, property, and casualty markets.

Insurers incorporate our robust data and analytics to assess physical risks and effects on asset and liability projections. They also use our insights to align financial analysis with emerging accounting, reporting, and disclosure requirements including the Principles of Carbon Accounting Financials (PCAF).

Our solutions enhance risk and capital management strategies and guide scenario choices for Own Risk and Solvency Assessment (ORSA), TCFD, International Sustainability Standards Board (ISSB), Corporate Sustainability Reporting Directive (CSRD), and other stress testing.

More on insurance
More on physical and transition risk in insurance
03 Corporations

Corporations

Our physical and transition risk solutions empower corporations across various domains, including energy, retail, and information technology.

Businesses incorporate our data and analytics to strengthen their physical and transition risk strategies. They also use our insights to comply with evolving disclosure and reporting requirements like the Sustainable Finance Disclosure Regulation (SFDR) and Corporate Sustainability Reporting Directive (CSRD).

Our global, regional, and site-level insights into exposures help companies manage supply chain risk and assess  physical and transition risk impact on credit profiles.

More on corporations
04 Public sector

Public sector

Our physical and transition risk solutions empower government agencies across various domains, including federal, regional, and local entities.

Government agencies incorporate our knowledge and insights, transparent modeling, and rigorous data to assess the significance of these risks and expand risk management frameworks.

Our global, regional, and local views on carbon emissions and insights into related macroeconomic and credit effects help government agencies evaluate physical and transition risk risks with clarity.

More on public sector
05 Buy-side

Buy-side

Our physical and transition risk solutions empower investors to expand their perspective on investing with insights into these risks.

Investors can use our trusted data, metrics, and tools to measure, benchmark, and manage exposure and risk within investment portfolios.

Our robust data and analytics support investors in physical and transition risk analysis and generating information required for TCFD. Our solutions also help investors improve transaction due diligence and screening in key areas like real estate investment.

More on portfolio management

Watch on-demand

News and views

podcast

Mar 18, 2025

 Moody's
Fires and floods with Firas Saleh

Firas Saleh, director of product management at Moody's, joins the Inside Economics team to discuss the increasing risk of wildfires and floods. He highlights the growing frequency and intensity of natural disasters and the significant economic losses they cause. The conversation then shifts to the insurance industry, focusing on how rising insurance premiums affect individual property owners and real estate markets. Although markets will adapt to these evolving risks, the transition may be challenging.

Listen now
whitepaper

Jan 31, 2025

 Moody's
Implications of Southern California wildfires for banks' real estate portfolios

During the week of January 6, 2025, there were up to six wildfires burning in the greater Los Angeles area. The fires have had a devastating toll in terms of loss of life and property as well as disruption to businesses and communities. The largest two fires are the Palisades fire in Pacific Palisades, covering 23,448 acres at the time of writing, and the Eaton fire, covering 14,021 acres as of January 27, including in Altadena and Pasadena.

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research

Nov 24, 2024

 Moody's Ratings
COP29 summit highlights financing hurdle and credit risks of policy catch-up

While the agreements reached in Baku could mobilize more resources, a persistent investment gap jeopardizes global targets and raises physical and transition-related risks for the most exposed entities.

  • Physical and transition risk
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Spotlight on catastrophe risk

Not only are catastrophes becoming increasingly frequent and severe, their impact can trigger a cascade of interconnected risks. Delve into Moody's latest insights on recent catastrophic events.

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announcement
Moody's
Moody’s: Ranked #1 with 7 category wins by Chartis

We are thrilled to announce that Moody's has achieved the #1 ranking and won 7 categories in the inaugural Chartis ClimateRisk50.

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research

Sep 25, 2024

 Moody's
161,849 commercial properties in direct path of hurricane

Hurricane Helene’s projected track across Florida’s panhandle and the South has potential implications for public safety and business continuity.

  • Physical and transition risk
  • Insurance
Read more
whitepaper

Sep 24, 2024

 Moody's
An integrated approach to evaluate population exposure to inland and coastal flooding

This study endeavors to provide a comprehensive retrospective analysis of the global population’s risk to flooding, how it has changed over time, how it changes regionally and how it is expected to change in the future.

  • Physical and transition risk
Read more
whitepaper

Sep 24, 2024

 Moody's
Moody's physical risk capabilities for regulatory compliance

A quick read client use case has been prepared on a recent win with the Bank of Luxembourg (BIL). This use case builds awareness of our capabilities.

  • Physical and transition risk
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article
Moody's Ratings
Sustainable finance and credit

Investors face a multitude of intersecting risks, including from sustainable factors. Browse Moody’s thought leadership for a heightened understanding of how these considerations shape credit strength.

  • Physical and transition risk
  • Credit risk
Learn more
article
Moody's
Lessons learned in scenario analysis by the Federal Reserve: A pathway to robust modelling of physical and transition risk in credit portfolios

In order to understand and enhance risk management practices in banks, the FRB arranged an exploratory exercise for the loan portfolios of six of the largest US banks.

  • Physical and transition risk
  • Macro economics
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article
Moody's
The impact of physical and transition risk on U.S. subnational economies

Moody’s new regional forecasts shed light on the economic impact of this significant long-term risk on all states, territories, and metro areas in the United States.

  • Physical and transition risk
  • Macro economics
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article
Moody's
Physical risk impact on mortgage credit losses—a portfolio example

Mortgage lenders, servicers, and regulators are becoming increasingly aware of the credit risks associated with severe weather events.

  • Physical and transition risk
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whitepaper
Moody's
Scenario analysis for the life insurance sector

To make informed decisions, build resilience, and address regulations, life insurers need modeling and scenario analysis to understand the effects of physical and transition risk on their business.

  • Physical and transition risk
  • Insurance
Read more
article
Moody's
Understanding future risks of physical and transition risk

In this video interview, Robert Muir-Wood, Chief Research Officer at Moody's Risk Management Solutions (RMS), introduces the company's key initiatives in environmental risk modeling and physical and transition risk adaptation measures and discusses the role of the company in the global efforts to achieve a net-zero future.

  • Physical and transition risk
  • Insurance
Read more

Learn more

Explore our physical and transition risk insights hub

Our latest data-driven research and thought leadership on the challenges and opportunities arising from physical, transition, and integrated risks.

Learn more