The growing financial losses associated with climate-related events highlight the inadequacy of our current risk assessment approach. Since the 1980s, the number of natural disasters causing significant economic impacts has tripled, and this trend is accelerating. I strongly believe, based on extensive research, that we must move beyond traditional methods that focus on past events and adopt a comprehensive, forward-looking framework for evaluating climate risks.

One of the main issues with today's methodologies is a critical lack of data. While advanced catastrophe models are effective tools for simulating high-impact, low-frequency events, they are computationally intensive and sensitive to the quality of their input data. Many organisations, especially in the insurance sector, continue to depend too heavily on historical loss data, which restricts their ability to predict non-stationary climate risks. We are facing a significant gap in granular, spatially explicit hazard values for individual events, and maps for common, high-impact threats such as pluvial (rainfall-induced) floods are often unavailable. Furthermore, interviews with the insurance sector suggest significant limitations in the use of sophisticated tools like damage curves and a widespread lack of necessary institutional
partnerships for their development.

To create actionable risk assessments, we must embrace future complexities. Alarmingly, fewer than half of the existing studies in the literature explored by SOTERIA incorporate future climate change scenarios, and even fewer consider potential changes in our societies. This is unacceptable. The future of risk evaluation relies on fully adopting the Shared Socioeconomic Pathways (SSPs) framework. By combining climate projections (such as those from the advanced CMIP6 models, which indicate more severe impacts than older versions) with socioeconomic development scenarios, we can generate robust projections to guide adaptation planning.

My perspective on risk assessment is anchored in the widely recognised IPCC framework, which includes Hazard, Exposure, Vulnerability, and Resilience. Implementing this framework means shifting from analysing single threats in isolation to adopting multi-hazard approaches that account for complex interactions and cascading effects. Financially, we must rigorously calculate the Expected Annual Damage (EAD). This involves using sophisticated damage curves obtained by cross-referencing hazard models with loss data, ensuring these curves are transferable across different regions and adaptable over time with adjustment indices to maintain accuracy.

Finally, risk assessment must not operate in a vacuum; it must inform action. It is crucial to proactively integrate proven adaptation strategies, such as Nature-Based Solutions (NBS) and Early Warning Systems (EWS). NBS are cost-effective interventions that simultaneously reduce hazard, exposure, and vulnerability, thereby strengthening overall resilience. EWS also provides an exceptional return on investment, as warnings can potentially reduce disaster damage by 30%. Achieving this robust, forward-looking system requires urgent and enhanced collaboration between public administrations and the insurance sector, particularly regarding data sharing and sophisticated modelling capabilities. This collaboration is key to unlocking true climate resilience. The growing financial losses associated with climate-related events highlight the inadequacy of our current risk assessment approach. Since the 1980s, the number of natural disasters causing significant economic impacts has tripled, and this trend is accelerating. I strongly believe, based on extensive research, that we must move beyond traditional methods that focus on past events and adopt a comprehensive, forward-looking framework for evaluating climate risks.

Author: Jesús Soler (Aquatec)