Physical Risk
Physical risk modelling links hazard intensity to asset vulnerability and then to financial loss. The chain is simple to describe and easy to get wrong at every link.
Acute and chronic hazards
Acute hazards — flood, windstorm, wildfire — are modelled event-by-event with frequency and severity distributions. Chronic hazards such as heat stress, sea-level rise, and drought are modelled as shifting baselines over decadal horizons.
- Event-set based modelling for acute perils
- Trend-based modelling for chronic hazards
- Vulnerability curves calibrated to asset class
- Tail behaviour tested with extreme value methods
From hazard to loss
Vulnerability functions convert hazard intensity into damage ratios, which are then applied to exposure values net of insurance and mitigation. Results are reported with explicit uncertainty ranges rather than single point estimates.