Factor climate change into your credit analysis operations and boost your success
© [M] Munich Re [P1] shapecharge / Getty Images

Factor climate change into your credit analysis operations and boost your success

The more factors you take into account, the more successful you will be in your credit underwriting operations. Especially in times of climate change

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    In lending, successful underwriting differs from less successful underwriting primarily in the ability to correctly assess the creditworthiness of applicants. With climate change, your risks increase as natural disasters occur more frequently and less predictably, increasing the likelihood that borrowers will be unable to meet their repayment obligations.

    A detailed understanding of natural hazards and climate change is the answer to ensuring that your credit underwriting decisions reflect physical climate risks. And do so well in advance of the entire term of your commitment, as your ability to make readjustments during the credit period is often very limited.

    Location Risk Intelligence enables you to make informed decisions on whether to approve, refuse, or amend the terms of a loan application. It supplies you with the most up-to-date and accurate data available, based on the latest scientific findings and the experience of over 50 years in the assessment and evaluation of natural disasters and the effects of climate change.

    US$ 1,000,000,000

    The entire industry is struggling with the impacts of climate change. In 2023, a new annual record was set with 45 catastrophic events causing damage of at least US$1 billion or significantly more. *

    *Source: Munich Re NatCatSERVICE, Status, January, 2024
    Underwriting is complex. Climate change is not making it easier
    © Munich Re

    Turn your 5 most important key tasks into your Top 5 success factors

    When assessing a loan application, the focus has usually been on the applicant's creditworthiness in order to assess whether the applicant will be able to repay the loan. Because the asset to be financed, usually a property, can have a significant impact on the ability to repay the loan, an assessment of how well this asset will retain its value over the entire term of the contract is of immense importance.

    This is particularly the case in times of climate change, when natural disasters not only occur more frequently but also cause greater damage. This is an additional risk whose reliable assessment, based on data that extends as far into the future as possible, is increasingly becoming one of the critical success factors for your business.

    Location Risk Intelligence with its analysis and evaluation tools offers you exactly this possibility. By identifying climate risks for individual physical addresses as well as for entire portfolios, classified and weighted according to a wide range of hazard scores, it enables you to run your credit checks with a maximum of confidence.

    Without factoring physical risk into pricing it is difficult for you as a credit analyst to improve the performance of your portfolio. The sooner you start the better, as you can avoid clever competitors adjusting their pricing and leaving you with a disproportionately risky portfolio. Under these circumstances, knowing your real risk exposure is critical to making profitable pricing decisions in the future, too.

    Location Risk Intelligence provides you with powerful tools based on scientific findings to analyse the physical risks caused by natural hazards and climate change, and to take their financial impact into account.

    This enables you to make your clients attractive offers despite the increasing risks of natural disasters, while at the same time taking into account the consequences of climate change. A competitive advantage you should not miss out on.

    Selecting risks in a credit model is becoming increasingly difficult, because as a credit analyst you need to consider more numerous and increasingly complex influencing factors in order to remain successful.

    The sheer volume of data to consider slows down processes, and there is often a lack of clarity about which data is relevant and which can be ignored. A data-driven risk assessment tool can be instrumental in enhancing human judgement, guaranteeing your long-term success.

    Location Risk Intelligence reliably provides you with up-to-date data based on the latest scientific findings and presented in a variety of visualisations. This means you can clearly interpret even complex risk data and use it immediately to make far-reaching risk-related decisions and meet regulatory requirements, thus ensuring a healthy and stable finance system.

    Particularly in large portfolios with thousands of assets, the riskiest ones can only be identified with the greatest attention to detail and corresponding effort. And due to climate change, risks that were previously classified as safe can often change within very short periods of time.

    However, using the latest risk models and software tools, such as those included in the Location Risk Intelligence editions, risks can be identified much earlier. Qualitative and quantitative predictions can then be made in relation to the risk exposure of individual assets or entire portfolios with up to 5 million locations, enabling you to tailor your exposure to your risk strategy.

    Capacity optimisation is another essential factor that plays a key role in credit underwriting and determines your success.

    You can ensure that the overall level of your risks is in line with your risk strategy by using the tools of Location Risk Intelligence to analyse your portfolios against the latest and most scientifically sound climate risk data. This enables you to identify high-risk exposures and reduce them reliably where necessary.

    In this way, you ensure the success of your company and remain as competitive as possible in a rapidly changing environment.


    Better decisions, better business!
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    Make your credit underwriting process more efficient and accurate
    with Location Risk Intelligence

    Increase efficiency
    Location Risk Intelligence helps to automate the process of assessing risks and making loan decisions. It provides easy and intuitive data access via web applications or API data integration for the further use of risk data in your own business systems. This enables you to process more credit assessments in less time and so increase productivity.
    Full coverage of natural catastrophe and climate risks gives you all the data you need to make decisions. For today and for the future. Premium data quality that you can rely on in your decision-making increases underwriting accuracy, optimises risk selection and improves profitability. This minimises the risk of misjudgement and enables you to reliably evaluate creditworthiness.
    Our risk management software solution can help underwriting teams to ensure that decisions and guidelines are applied consistently. Munich Re has long-standing expertise in understanding and assessing the risks of natural catastrophes and climate change.
    Data analytics
    Thanks to global data coverage we provide you with consistent data sets that take into account current and future risk exposures, enabling you to make risk-sensitive short-term as well as long-term strategic decisions.

    How Location Risk Intelligence Platform and its editions support you in your underwriting operations
    © Munich Re

    How Location Risk Intelligence Platform and its editions support you in your credit underwriting operations

    Munich Re’s Location Risk Intelligence is a modular SaaS solution that enables you to understand, measure and manage the risks represented by natural hazards and climate change - worldwide. 

    The following editions are of particular interest to your underwriting needs, as they enable you to generate up-to-date climate-related data for individual sites or entire portfolios, documenting the related exposure to these risks based on scientific evidence. 

    The platform supports you in particular in incorporating climate-related effects in your underwriting decisions in order to present your customers with attractive offers that take natural disasters as well as climate change and its consequences into account.

    By entering individual locations or uploading entire portfolios into the Location Risk Intelligence Platform, you can easily analyse, visualise, compare, and document natural disasters and climate risks in the form of meaningful reports. The modular platform not only allows you to identify your current and future climate risks, but also to take the financial impacts of climate change into account.

    This is the ideal solution if you want to reliably quantify the financial impact of physical climate risks and take your analysis and assessment of the physical risks associated with climate change to the next level. Based on one of the world's most comprehensive databases of natural disasters and hazard modelling under different climate scenarios, this edition provides detailed information on the physical exposure and expected financial impacts of climate change (Climate Expected Loss) for all locations - worldwide.

    This edition will help you not only to understand the exposure of assets to current physical risks, but more importantly to analyse and assess the physical risks associated with climate change in a wide range of future scenarios.

    Considering both acute and chronic climate risks, this edition provides information on eight climate hazard scores. And unlike the Natural Hazards Edition, the risk scores are not only calculated on the basis of past events, but also include projected changes in the intensity and frequency of future events under different climate scenarios.


    Embrace the future with confidence, powered by Location Risk Intelligence's data-driven insights. Book your demo today to start risk-aware credit underwriting.