Risk Thinking founder Ron Demo explains how the company models the financial risk of climate change across billions of locations worldwide, giving building owners and investors a way to see which assets are exposed and which to retrofit first.
00:00:04:28 - 00:00:36:14
Ron Demo: Risk Thinking is a company devoted to measuring the climate change financial risk that we face. So that is really what is the effect that climate will have, the financial effect on buildings, on countries, on provinces, you know, states, businesses. And the big differentiator for us is really that we look at this problem from a complete what's called radical risk point of view.
00:00:36:15 - 00:01:08:01
Ron Demo: In other words, there's so much uncertainty in climate summit, uncertainty in the economics of climate and so on that it's impossible to use anything like forecasting to understand what will happen. So what we did, we built a database which covers the entire surface of the world. It covers 33 billion points down to 64m². So in other words, I can tell you what the shed in your house is doing in 2015.
00:01:08:02 - 00:01:37:15
Ron Demo: It does that by looking at every single bit of data that you can get on climate change. There's a lot of open source data and every single scientist view of the future, and we develop a distribution of possible values for any risk factor in the future. Because climate change is one unique feature as opposed to financial risk. The risk will always depend on the location and the asset type.
00:01:37:17 - 00:02:11:06
Ron Demo: People don't have that kind of data. So we've developed that data, which allows us to look at buildings across the world and understand the differences in climate might impose on them. So in every point on the surface today, we have all of history and all of the future to 2100 and all of the scientific opinion on the future, which we get by reading about a quarter of a million scientific papers every week now using machine learning, of course.
00:02:11:06 - 00:02:39:12
Ron Demo: So we we understand the full uncertainty in the future as best as you can from the best scientists, from the best data. So our foot is really here is a distribution of possible values that you might experience in Singapore. If you're worried about your building getting flooded, this is the sort of distribution that you might experience. Or if you're in New York and you're worried about flooding in Manhattan, it's the same thing.
00:02:39:14 - 00:03:00:20
Ron Demo: And and with that, you can actually plan you can understand how to mitigate risk. Which buildings should I retrofit. But what the challenge is. So which buildings to be retrofitted first. And and you know, where do we get the most money for our retrofit. You know, we don't have infinite cash to retrofit and that's what we can solve.
00:03:00:22 - 00:03:37:05
Ron Demo: Now, in addition, you know, so that's you know, I think there's a there's a lot to do with buildings because they a very big part of our footprint. But today our biggest clients are Bank of New York Mellon. And they have 40% of all the world's custodial assets of listed assets. What's amazing about that is because of the nature of the deal we have a user of their platform can walk up the platform, press a button, say, show me what would happen to this portfolio over the next few years.
00:03:37:06 - 00:04:05:08
Ron Demo: This is the perfect solution for understanding what climate is going to do to you. And think of a big banks that are running mortgage portfolios and are regulated in investments by SEC. We have a weird Latins for for data. So what we have today in the database, amongst other things, is every section of every pipeline, every airport, every building in North America.
00:04:05:08 - 00:04:28:29
Ron Demo: We have every building in France. And we slowly assembling that. And we, you know, we have tons of things, every internet exchange and so on. So the day we get something like that, we can immediately put that in a database and that immediately is aligned with all the other data. We have 100,000 data sets. It's about five petabytes of data.
00:04:29:02 - 00:04:39:07
Ron Demo: And immediately those buildings are aligned with all of the data so that we can immediately say what the risk of those buildings to those billings will be.