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Quantifying Climate Risk

Translating hazards and vulnerabilities into measurable risks

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Step 3: Measure and Prioritize Risks

Quantification transforms qualitative understanding into actionable metrics for decision-making, prioritization, and tracking progress over time.

Climate Risk Scenario Calculator

Select Asset Type:

Time Horizon:

Adaptation Investment:

🏥Projected Annual Risk: Regional Hospital (2050)

Economic Loss
$117,000
per year
Potential Casualties
45
per year
Service Disruption
18
days per year
Primary Hazards:
floodingpower outageextreme heat

Interpretation: Without adaptation, regional hospital faces severe climate risks by 2050. Losses increase due to both more frequent and more intense events.

Risk Quantification Approaches

1. Qualitative Risk Matrix

Simple, fast, good for initial screening when data is limited.

Low Likelihood
Medium
High Likelihood
High Impact
Medium
High
Critical
Medium Impact
Low
Medium
High
Low Impact
Very Low
Low
Medium

2. Probabilistic Risk Assessment

Quantify using probabilities and expected values:

Expected Annual Loss = Probability × Consequence

Example: Coastal facility faces 10% annual flood probability. If flooded, damage is $2M.

Expected annual loss = 0.10 × $2,000,000 = $200,000/year

3. Scenario Analysis

Model impacts under multiple climate futures (e.g., RCP 2.6, 4.5, 8.5):

  • Best case: Aggressive mitigation, low warming (1.5-2°C)
  • Middle scenarios: Current policies trajectory (2-3°C)
  • Worst case: Business as usual, high warming (4°C+)
  • Decision rule: Robust adaptation works across scenarios

4. Cost-Benefit Analysis

Compare adaptation costs vs. avoided damages:

Without Adaptation:
Expected losses: $1M/year × 30 years = $30M
With Adaptation ($5M upfront):
Reduced losses: $0.3M/year × 30 years = $9M
Net benefit: $30M - $9M - $5M = $16M saved

⚠️ Uncertainty Management

Climate risk quantification is inherently uncertain. Don't let perfect be the enemy of good:

  • Acknowledge uncertainty: Use ranges (best/worst case) not false precision
  • Test sensitivity: Which assumptions matter most?
  • Prefer robust decisions: Actions that work across scenarios beat optimization for one
  • Update regularly: As climate science advances, refine assessments

Risk Prioritization Framework

Not all risks demand equal attention. Prioritize based on:

MagnitudeHigh-consequence risks (lives, critical infrastructure) take precedence
UrgencyNear-term risks and points of no return require faster action
FeasibilityQuick wins and co-benefits build momentum for harder challenges