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Japan's MS&AD to predict climate-change impact on companies

Insurer partners with US startup Jupiter to help clients with risk disclosure

A wildfire burns in Australia in December 2019: Japanese insurer MS&AD will offer clients forecasts of the likelihood of damage to their businesses from natural disasters.   © Getty Images

TOKYO - Japan's MS&AD Insurance Group Holdings will begin offering a service to analyze the risks climate change pose to companies, Nikkei has learned.

The insurer will partner with U.S. startup Jupiter, which will use its technology to help MS&AD predict the financial effect on companies of natural disasters such as floods. MS&AD aims to support companies seeking to put risk-control measures in place by providing them with detailed data.

The Financial Stability Board, an international body that monitors the global financial system, has urged companies to disclose information on how climate change will affect their operations and management. MS&AD, which is the parent company of Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance, will work with Jupiter to help clients with such disclosures.

Jupiter gathers data from satellite imagery and advanced computer models. Its strength is its artificial intelligence technology, which is used to determine possible risks from natural disasters. The company employs experts, such as scientists from the U.N. Intergovernmental Panel on Climate Change.

Jupiter's technology will enable MS&AD to visualize the risk of global natural disasters, including heat waves, droughts, floods, and forest fires, down to 90-sq.-meter units. Multiple scenarios will be prepared through statistical analysis of past disasters to make forecasts every five years from 2020 to 2100.

MS&AD unit MS&AD InteRrisk Research and Consulting will calculate the impact on companies' finances based on Jupiter's data and sell it to clients.

For example, a typical MS&AD forecast might predict a 60% chance of flooding exceeding 3 meters by 2030 in a certain region, estimating the damage to buildings at 500 million yen ($4.65 million) and 50 million yen in equipment damage.

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