Physical Risk Management: The Vital Importance of Climate Change Technology

Flooding is one of the most pressing climate-related threats to real estate in the UK, turning once secure investments into potential liabilities. As climate change intensifies, so does the urgency to protect properties from the rising risk of flooding. This blog delves into the cutting-edge technologies now at the forefront of climate change driven flood risk management, offering innovative tools to monitor, predict, and mitigate flood risk in real estate. Discover how these innovations are shaping the future of property investment and safeguarding communities across the UK against the unpredictable forces of nature.

The application of GeoSmart’s new FloodSmart Analytics provides investors and asset managers the ability to assess flood risks for any number of properties quickly and accurately, and make informed decisions about flood management, mitigation and asset values.

How does flooding affect property?

The UK has c.1.6m commercial properties. These assets are a key part of the economic development of the UK and are relied upon by millions for their day-to-day livelihoods but are also, crucial to the billions of investments made by investors globally. Flooding can lead to drastic effects on commercial property several ways:

GeoSmart recently published an article on the ongoing risk of Stranded Assets. The key cause of becoming a stranded asset from flood risk would be long term un-insurability, largely driven by a worsening flood situation from climate change. Un-insurability is likely to occur where the average annual damages become excessive. More on this can be found here Stranded Commercial Real Estate Assets: The Flooding Challenge in the UK.

GeoSmart’s FloodSmart Analytics

Our new technology platforms is an integrated hydrological and loss modelling system that quantifies the effects of all four main flood sources on a common scale, as well as deriving a standardised total flood risk score and an estimate of annual average damage from flooding for each property.

It includes algorithms to quantify the impact of climate change on flood costs and long-term risks. Within this technology GeoSmart have been able to accurately quantify the risk of flooding for every single property in the UK and also takes into account national flood defences. Our clients use this new risk management technology to make fast and effective decisions regarding potential transactions in an environment where deal flow is crucial to fund performance.

Portfolio Risk Analysis

Asset managers often have a large number of assets within their funds that retain the need of ongoing management and active risk monitoring. GeoSmart have estimated that 15% of the UK’s commercial real estate is at high to very high risk of flooding and increasing with climate change creating assets that are uninsurable, or inoperable.

By applying GeoSmart’s future resilient portfolio management tools, it is now possible to succinctly analyse any volume of sites through a single integrated platform. By being able to identify those properties most at risk decisions can be made about direct spending to the areas that need it most and support other risk management strategies and business planning.

With understanding, comes action and the best course of action is mitigation. Once risks are identified, resilience planning, insurance coverage, emergency response strategies and contingency planning all come into play. Managers are also able to deploy capital to exactly where I needs to go including investing in flood defences, sustainable drainage and urban planning as well as early warning systems.

Smart Buildings

The concept of Smart Buildings is no longer just a concept but a very real advancement in technology and sustainability. Smart buildings are equipped with sensors that can detect rising water levels, heavy rainfall, or pressure changes in real-time. These systems provide instant alerts, allowing building managers to take swift action before a flood becomes severe, such as activating flood barriers or pumps, often automated and done without human intervention.

GeoSmart’s proprietary flood data and consulting services is geared for asset managers, insurers and lenders and can help you take action now to manage and mitigate flood risks across all transactions including acquisitions, disposals and existing portfolios. Find out more by visiting us at: GeoSmart for Asset Managers or get in touch directly below: