Texas Floods Sound Alarm Bell, According to Moody's
Moody's Invests in Fathom to Advance Flood Risk Modelling
In a significant move, tech-focused investment bank ICON Corporate Finance has acted as the exclusive financial adviser to Fathom, a leading global flood modelling business, in a strategic investment from US ratings giant Moody's. This investment recognizes the growing significance and impact of flood modelling in today's climate.
Moody's analysis underlines the inadequacy of relying on historical flood levels for assessing flood risk in the U.S. The evolving flood risks, driven by climate change, urbanization, and more extreme rainfall events, necessitate advanced probabilistic modeling and real-time data to capture the changing flood risks accurately.
The recent severe flooding events in the Northeast U.S., where extreme rainfall in short timeframes caused flash flooding and significant damage, serve as a stark example. These events highlight the vulnerability to pluvial flooding (from rainfall rather than rivers), which historical flood data may not fully represent. This underscores the limitations of models grounded only in past flood levels that do not account for these new patterns.
Moody’s comprehensive retrospective and forward-looking flood risk analyses use advanced modeling that integrates climate scenarios and regional changes. This helps identify where populations and economies face growing exposure over time, informing investors, insurers, lenders, and regulators about emerging risks that historical data alone would miss.
The insights gained from these analyses are used for improving risk management practices, supporting insurance solutions, and guiding resilience-building efforts. In essence, Moody’s analysis highlights the need for dynamic, data-driven flood risk assessments that go beyond historical records to effectively manage future flood risks in a changing environment.
This investment in Fathom aims to help the company become the world leader in water risk intelligence. Moody's RMS, the leading global catastrophe risk modeling and solutions company, has estimated Hurricane Debby's U.S. private market insured losses at US$1.5 billion, and the insured losses from the California flooding are anticipated to be between US$0.5-1.5 billion.
Meanwhile, Moody's RMS Event Response has estimated losses to the National Flood Insurance Program following Hurricane Debby. The total U.S. economic losses from the recent California flooding are estimated at US$5-7 billion. These estimations underscore the importance of accurate flood risk assessments for effective risk pricing, credit risk evaluation, infrastructure planning, and natural catastrophe response.
In summary, the strategic investment from Moody's marks a significant step forward in the field of flood modelling. It underscores the need for advanced, data-driven flood risk assessments to accurately manage future flood risks in our changing environment.
- The strategic investment from Moody's in Fathom is a testament to the growing importance of environmental-science, particularly flood modelling, in the context of climate-change and its impact on flood risks.
- By incorporating science, finance, and advanced modelling, Moody's aims to make accurate flood risk assessments that can aid in effective risk pricing, credit risk evaluation, infrastructure planning, and natural catastrophe response, thus contributing to the development of environmental-science.
