Quantifying changing climate risks and built environments in Australia: implications for lenders, insurers and regulators

In this chapter we focus on the governance of changing climate risks for built environments in Australia through discussion of the Cross Dependency Initiative's (XDI) 2019 analysis Climate Change Risk to Australia's Built Environment: A Second Pass National Assessment. The Assessment extends the approach of a national assessment undertaken by the Australian government a decade earlier, and this chapter discusses risk governance implications of the Assessment's projections for three key stakeholders in Australia's built environments: insurers, lenders and regulators. The Assessment makes notable contributions in several respects to effective governance of climate risks in Australia. Firstly, the Assessment is comprehensive in scope, covering around 15 million addresses in all 544 of Australia's local government areas. Secondly, the Assessment focuses on five key climate-implicated, loss-causing hazards in Australia: riverine flooding, coastal inundation, forest fires (bushfires), wind gusts and drought-driven subsidence of clay soils. Thirdly, drawing on a carefully considered methodology, the Assessment provides a set of four key metrics used for translating climate risk into different aspects of financial risk that is helpful for understanding changes in climate risks over time for built environments. The Assessment begins to quantify climate risks at local scale, demonstrating economically material projected changes in climate risks with strong geographical clustering in Australia from 2019 through to the year 2100.