For decades, companies have helped Wall Street, large retailers, major industries and other clients anticipate weather fluctuations, and the subsequent price and inventory volatility.
- But the new era of extreme weather events has created a market for a different approach — and startups are filling it.
For decades, companies have helped Wall Street, large retailers, major industries and other clients anticipate weather fluctuations, and the subsequent price and inventory volatility.
- But the new era of extreme weather events has created a market for a different approach — and startups are filling it.
The big picture: The U.S. economy's ability to absorb extreme weather and climate shocks depends in part on how the business community, from big banks to big box chains to airlines and energy firms, incorporates risk management into their planning.
- It also requires new actions on the part of cities and states, as well as individual families.
State of play: In recent years, money has begun pouring into startups that aim to help businesses get a better handle on their climate change-related risks.
- Already in 2021, this venture investment has reached a record $584 million globally, with most of the funding (about $437 million) concentrated in the U.S., per Pitchbook data.
- These companies' missions range from generating, collecting and analyzing data to more specific services like tracking supply chain vulnerabilities, agricultural forecasts and more.
- In the past, only insurance giants such as Swiss Re and Munich Re were out front on climate risk analysis and management — but now it's becoming an imperative for companies large and small.
- Last year, a record 22 "billion-dollar disasters" hit the U.S., with at least nine so far this year, including Hurricane Ida.
Zooming in: Investors ranging from Silicon Valley VCs to venture investors focused on adjacent industries to insurance companies are jumping in to write checks.
- Notable recent deals include London-based climate intelligence startup Cervest's $32 million Series A round in May, raising some of the funds from prominent investors Chris Sacca and Marc Benioff, as well as Jupiter Intelligence's $40 million Series C round last month.
- The latter boasts contracts with federal agencies as well as major banks and cities, and is expanding into Asia.
- One weather and climate risk prediction firm, Tomorrow.io, recently announced plans to launch a fleet of satellites to improve its products, while others are investing in AI and machine learning to gain insights from massive datasets.
- Earlier this year, Moody's bought climate and natural disaster risk modeling company RMS for about $2 billion to bolster its climate risk analysis business. It also bought a majority stake in Four Twenty Seven, which measures hazards ranging from heavy rainfall to sea level rise, back in 2019.
Between the lines: With the Securities and Exchange Commission and other regulators eyeing climate risk disclosure rules, there are questions about whether these companies' products will allow for apples to apples comparisons, or whether they'll use their own climate models whose methods could be deemed proprietary and remain shrouded in mystery.
The bottom line: The need for all businesses to navigate the weather going forward is as undeniable as climate change itself — and they'll pay for the best tools money can buy.
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October 03, 2021 at 01:59AM
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The extreme weather risk-hedging industry - Axios
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