Why climate risk matters more than ever

For many businesses, climate risk is becoming a core financial risk, impacting banking, insurance, asset owners and asset managers globally. The recent Ecosperity Week 2025 in Singapore underscored this urgency, highlighting how climate-related events are no longer black swan occurrences but rather systemic factors demanding immediate and strategic financial responses. Banks face increasing credit and default risks as climate change impacts key sectors such as agriculture, energy and real estate through both physical hazards (floods, droughts, extreme weather) and transition risks (policy changes, technological shifts). Insurers are grappling with unprecedented catastrophe losses, forcing a fundamental recalibration of their risk models and underwriting strategies. Asset owners and managers are under mounting pressure to accurately price climate risks into their portfolios and navigate increasing regulatory scrutiny while mitigating greenwashing risks. 

A significant hurdle in effectively addressing these challenges has been the “data gap.” Financial institutions often struggle with fragmented, inconsistent and inaccessible climate risk data. This slows down the development of robust risk models, increases compliance costs and hinders the integration of climate considerations into core financial processes such as valuation, lending and underwriting. 

Snowflake’s ecosystem, with partners like AlphaGeo, is a critical enabler in bridging this gap and driving data-driven resilient investing.

AlphaGeo x Snowflake: Delivering cutting-edge climate financial impact analytics

Dealing with any potential physical climate risk requires rapid adaptation. Institutions need to incorporate diverse streams of data from climate models, market trends and in-house asset-level information to make calibrating decisions. Snowflake’s AI Data Cloud for Financial Services partners with over 120 global data providers spanning physical, nature and transition risk domains to provide a unified platform that accelerates Environmental, Social, and Governance (ESG) data model development, supports rapid collaboration and delivers cutting-edge analytical solutions such as AlphaGeo. Built natively on Snowflake and deployed via AWS, AlphaGeo provides a revolutionary approach to quantifying, adapting to and acting on climate risk for banks, insurers and asset managers. 

Traditional financial models lack the granularity and dynamism to accurately reflect the location-specific and evolving nature of climate risks. How do you price the increased insurance costs for a property located in a high-flood-risk zone or the potential decrease in asset value due to increased wildfire frequency?

AlphaGeo addresses this challenge with its proprietary Climate Risk and Resilience Index and Financial Impact Analytics suite. These tools empower financial institutions to: 

• Quantify physical climate risk: AlphaGeo delivers precise, location-level scoring of physical climate risks — including floods, heat waves, droughts, wildfires, hurricanes and sea-level rise — across multiple future scenarios up to 2100. A bank, for example, can pinpoint flood risk variances across its mortgage portfolio at the suburb or district level.

• Factor in local resilience: The Global Adaptation Layer enhances accuracy by incorporating real-world resilience infrastructure — such as seawalls, drainage systems and fire response networks — creating a “ground truth” view of actual exposure. This transforms generic hazard maps into investment-grade risk intelligence.

• Embed climate into financial models: AlphaGeo’s Financial Impact suite integrates directly with cash flow and valuation models. It adjusts for location-specific OpEx (for instance, rising insurance and utility costs) and CapEx (for instance, retrofit investments) and recalibrates discount rates to reflect climate uncertainty.

• Simulate financial impact of adaptation: Institutions can input their holding periods, asset strategies and cost assumptions. AlphaGeo then generates revised NPVs, helping investors weigh the ROI of climate adaptation — from property retrofits to portfolio rebalancing.

• Integrate into core decision systems: The outputs plug directly into underwriting, investment and credit systems. Insurers can refine premiums in climate-sensitive zones; asset managers can adjust allocation models; banks can price transition and physical risk into lending decisions — all powered by Snowflake’s scalable, secure data platform.

Real-world impact

The testimonials from leading financial institutions demonstrate the tangible value of the AlphaGeo and Snowflake collaboration:

• A Gulf-based sovereign wealth fund utilized AlphaGeo to map the medium-term climate risk exposure of its global infrastructure assets, influencing its risk mitigation and adaptation strategies. 
• Oaktree Capital leveraged the platform to quantify climate risk across its complex portfolio of real estate equity, private loans and traded securities, enabling better-informed investment decisions.
•  Zurich Insurance Group (ZIG) integrated AlphaGeo to optimize its global real estate portfolio by identifying regions with higher growth prospects based on climate risk, resilience and financial impact. 

ZIG deep dive: Climate intelligence in action

As a global insurer with a multibillion-dollar real estate portfolio, Zurich Insurance Group faced a critical challenge: How do we price climate risk into our investment strategies without compromising long-term return objectives?

Working with AlphaGeo and Snowflake, Zurich took a bold step: integrating physical risk analytics directly into its real estate investment model. Here’s how it worked:

1. Climate risk mapping: AlphaGeo provided location-specific climate exposure scores under different climate scenarios (for instance, RCP 4.5 and 8.5), identifying hotspots for flood, heat and storm exposure.

2. Resilience profiling: Using the adaptation layer, Zurich was able to understand which regions were better protected — not just which areas were at risk, but which areas were managing risk effectively.

3. Financial integration: Zurich then used AlphaGeo’s Financial Impact Analytics to adjust CapEx projections (for retrofits or insurance premiums) and modify expected returns. The result: a dynamic model that factored in both risk and resilience to optimize long-term performance.

As Andrew Angeli, Global Head of Real Estate Research and Strategy at Zurich Insurance Group, put it, “The increased frequency and severity of extreme weather events is forcing real estate investors to think differently. AlphaGeo’s hyperlocal climate intelligence, delivered via Snowflake, enables better-informed investment decision-making. It’s not just about avoiding risk — it’s about identifying opportunity.”

Why it matters

Zurich’s example shows what’s possible when insurers move beyond compliance and use climate data as a strategic asset.

• Optimized portfolios based on resilience, not just return
• Enhanced reporting for regulators, investors and rating agencies
• Faster decisions with accurate, location-specific analytics delivered instantly via Snowflake

Building climate-proof portfolios: The time for action is now

Climate risk is no longer a future threat for many companies; it is a present financial reality demanding immediate attention. For banks seeking to understand and mitigate climate-related credit risks, insurers needing to reprice their exposure in a volatile environment and asset managers striving to build climate-proof portfolios, the combined power of Snowflake, AlphaGeo and AWS offers a proven pathway. By leveraging unified data, advanced analytics and collaborative platforms, the financial sector can navigate the challenges of climate change.

Whether it’s building robust ESG MDM layers, accelerating transition risk modeling or simulating physical risks at a granular level, the solutions are available today to ensure climate resilience for you and your clients.

Learn more about the AI Data Cloud for Financial Services.