Rich Sorkin, Co-Founder, Jupiter Intelligence
Please give us some background information on yourself and how your organisation plays a leading role in the climate risk agenda?
Jupiter Intelligence is the leading physical climate risk analytics firm providing high-resolution, forward-looking hazard data based on peer-reviewed scientific models. Its client list includes six of the Global 1000 companies and spans the financial, insurance, energy, industrial, real estate, engineering and public sectors. Organizations often use Jupiter’s data to help them quantify physical climate risks as a critical first step to develop comprehensive, customised climate resilience plans.
I co-founded Jupiter in 2017. In my three-decade-long career as an entrepreneur, executive and board member, I have led several breakthrough technology companies, concentrating on energy, financial services, media, politics and the environment. I am the special advisor to Data Collective Venture Capital for space, weather, risk and intelligence; chair of Kairos Aerospace’s advisory board; and advisor to Capella Space.
What are the biggest physical climate risks faced by business?
The most direct impacts are on business continuation and capital – particularly on critical, long lifetime assets, which are susceptible to both extreme weather impacts and chronic climate shifts. While these risks can lead to direct impact on the bottom line; physical climate impacts can also lead to severe investor, reputational and legal risks. PG&E's bankruptcy due to wildfire liability as well as the litigation associated with chemical spills in and near Houston after Hurricane Harvey are just two examples.
What should businesses do to become climate smart?
Three emerging best practices are:
● Embed climate risk management and adaptation strategies into both short-term business operations and long-term asset planning. Even though no one can predict the future, active risk management can lead to better resilience over time.
● Thoroughly examine and establish the organization’s risk tolerance. Understand the trade-offs and costs of action and inaction, and when is the best time to act.
● Address the "tragedy of the horizon," where time horizons relevant to business planning may not fully align with those of climate risks. As a basic example, in mortgage lending, chronic and acute effects driven by climate change can occur well within the lifetime of a residential mortgage. The frequency and severity of these impacts can depend on the dynamic conditions of the specific asset property, its location and its surroundings over a 30-year time frame.
What are the best practices per segment and geography?
● Municipalities and engineering construction firms are rethinking design standards for critical infrastructure. New York City, for example, released new city-wide design guidelines after Hurricane Sandy, based on extensive, forward focused, location-specific scientific research on climate impacts.
● The insurance and financial (mortgage) industries are leveraging better data and models to improve actuarial decisions for flood insurance underwriting.
● Industrial and energy companies are hardening their critical facilities to minimise business interruption and develop emergency response plans in anticipation of a future marked by more severe and increasingly frequent extreme weather events.
What is the connection between mitigation and adaptation?
With its focus on resilience and climate adaptation, Jupiter is, broadly speaking, in the business of helping businesses, governments and nonprofits better understand and quantify the physical risks and cost of climate change. As a result, decision makers have a better foundation to weigh different options (including emissions mitigation and climate adaptation) and identify an economically optimal balance. By highlighting the consequences of climate inaction, Jupiter generates momentum for both climate change mitigation and adaptation.