Physical risk analysis

Do you know your business’ exposure to bushfire risk? Or flooding, or extreme heat?

Recently the ABC featured a story on Fireline, a spatial tool developed by CSIRO to both model bushfire risk across Australia currently, and inform how bushfire risk will intensify under a high emissions climate scenario (SSP3-7.0) in 2090. As the article states, “While this modelling is not a prediction of the future, its aim is to allow authorities to better plan for a potential catastrophic fire situation”[1].

This, however, is not the first version of Fireline. ERM Energetics has our own, earlier version of Fireline, also developed with CSIRO and, to this day, underpinned by publicly available data. A proprietary tool, our Fireline also provides an Australia-wide view of bushfire risk, however it has the ability to assess risk for a range of future climate scenarios and time horizons, particularly 2030 and 2050 – time horizons commonly cited across Australian business as markers for the assessment and disclosure of physical risks.

The fundamental CSIRO science underpinning Fireline uses granular climate, topographic and vegetation data to inform how intense and difficult to manage a bushfire could possibly be at a particular location. Unlike other tools on the market, it does not incorporate the probability of a bushfire starting, which inherently introduces large uncertainties. Fireline allows you to assess the potential severity of bushfire risk to your assets, operations and access routes in a worst case scenario. The insights provide an understanding of the required levels of adaptation - such as vegetation clearing around assets, the need for back-up power or changes to agricultural practices to ensure your assets and business remain resilient. ERM Energetics can also work with the CSIRO’s more recent version of Fireline should your business seek an understanding of the potential risks through to a longer time horizon such as 2090.  

With Fireline, Heatsink, flood models and our proprietary multi-hazard screening models, we can provide insights into a range of physical climate risks

ERM Energetics has a number of risk assessment tools. In addition to Fireline, we can understand the potential for extreme urban heat with a screening tool known as Heatsink. Heatsink maps the urban heat island effect (urban heat above the baseline in the area) at a 30m resolution, enabling a granular understanding of vulnerable areas. With the findings, preparations can be made for additional cooling requirements.

To understand the risk of flooding, through ERM we can access leased flood modelling data for a range of scenarios from Fathom, a flood risk specialist provider, to perform granular flood analysis. We can assess your historically impacted or identified high risk assets.

Know the risks across your supply chain

Of course, understanding physical risks throughout your value chain is key for AASB S2 disclosures. Our supply chain hazard model helps you understand the risks to a global and diversified supply chain from cyclones, riverine and coastal flooding, water shortages and human heat stress.

The model allows for visualisation (see sample below) and understanding of risks for key regions and suppliers, as well as the drivers of those risks. It provides a first-level screening climate risk assessment at a global scale.

Figure 1: ERM Energetics' global multi hazard screening model

A transparent and AASB S2 aligned approach

Also key for AASB S2 is a detailed understanding of the analytical approach undertaken. We will provide you with a Basis of Preparation (BoP) which will ensure the transparency and traceability of our approach by capturing the approach, inputs, assumptions and limitations of our analysis. The BoP will also support an assurer’s understanding of our analysis, enabling compliance with AASB S2 assurance requirements. Our transparent and bespoke approach sets us apart from other ‘black box’ and ‘one size fits all’ approaches[2].

Building resilience starts with a clear understanding of risks. In the face of uncertain climate futures and mounting pressure to act, ERM Energetics’ insights provide climate intelligence to inform your decisions and create strategic value. We work with you to create business resilience and explore opportunities.