Aon’s new Climate Risk Advisory team will use the broker’s Impact Forecasting models to provide physical risk diagnostics and advisory services on climate-related financial risks.

Climate change

Increased climate-linked extreme weather and natural catastrophes have led Aon to form a Climate Risk Advisory team.

The broker said the new team would provide physical risk diagnostics and advisory services to help financial institutions, public sector entities and firms with large real estate holdings to make better decisions for climate-related financial risks.

Aon noted in its announcement the more than 400 natural catastrophes that caused some $313bn of damage globally in 2022.

The intermediary spelled out the brief for its new climate unit as follows:

  • Forward-looking diagnostics for a range of climate scenarios, applying climate hazard data to individual asset locations to understand key geographies at risk today and in the future
  • Climate advisory to build a holistic, end-to-end approach to risk modelling and management, from scoping the exposure to communicating and acting upon strategies.

Liz Henderson, previously co-head of Aon Reinsurance Solutions’ US catastrophe management team, has been named leader of Climate Risk Advisory.

“Our initial focus will be on financial institutions and public sector entities, which have an immediate need to understand their climate risks,” Henderson said.

She will report to Joe Monaghan, global growth leader of Reinsurance Solutions.

Monaghan said: “In launching Climate Risk Advisory, Aon recognises how financial institutions may benefit greatly from the catastrophe and climate expertise, modelling and solutions we have developed and honed over several decades for the re/insurance sectors.

“Financial institutions can now tap our ongoing investment in our Impact Forecasting models and evolving scientific research, which will help them to navigate volatility and build business resilience,” he said.

The team will combine academic cooperation with academic bodies with catastrophe and climate change models from Aon’s Impact Forecasting and third-party vendors, and analytical expertise from across Aon’s capital, climate, and credit, specialties.

Henderson added: Our team takes modelling data and brings it to life with approximately 30 years of experience collaborating with insurer C-suite leaders who manage these issues every day.

“Our advice goes beyond analysing the results of any individual approach, to helping organisations develop holistic climate risk programs that can navigate the inherent uncertainty in climate change to make better decisions on risk management.”