Leveraging its strategic partnership with global reinsurer Munich Re, CoreLogic International has analysed Victoria’s residential property climate hazard and risk exposure, revealing very high risk of climate hazard to almost 9% of Victorian properties.
Dr Pierre Wiart, CoreLogic’s Head of Consulting and Risk Management Solutions, says “Our research revealed almost 9% of Victorian households are at very high risk of climate hazards, with another 8% at high risk. This is equivalent to a combined estimated property value of $277 billion at risk.
"Like most Australian states and territories, Victoria’s diverse landscape is vulnerable to severe weather events such as bushfires, floods and coastal erosion. Future scenarios indicate that both bushfire and flood risks are likely to be on the rise across the regions due to drier environments but also increasing precipitation, albeit separately.”
Looking at the different climate events, bushfire hazards are significant throughout Victoria, with high-risk areas in Melbourne’s outskirts, particularly to the north of the city.
“While most parts of Victoria face a moderate to high bushfire risk, the risk is highest around Melbourne’s north-east between Melbourne and the Yarra Ranges, from Ballarat to the border of the Lerderderg and Wombat State Parks, and the Great Otway National Park.
“Flood risk is significant from Swan Hill to Echuca and Shepparton due to the Murray River, while the flat landscape of Melbourne and its surrounds creates a flood risk from the Yarra, Maribyrnong and Werribee Rivers. However, accurate future flood projections can be tricky due to conflicting forces at play, namely the relative impacts of drought and precipitation.
“Rising sea levels are also expected to affect many parts of Victoria under extreme future scenarios. Victoria is already feeling the effects of coastal erosion, with the Victorian Government providing funding to tackle the problem at beaches such as Apollo Bay, Lakes Entrance and Mallacoota. Our research shows that rising sea levels are likely to exacerbate coastal erosion in many parts of the state,” says Dr Wiart.
CoreLogic’s research analysed over 2.5 million Victorian residential properties to assess climate hazard ratings and risk scenario outcomes appended at property level. The research modelled a range of climate risk scenarios and outlined Victoria’s hazard profile and overall risk level for properties exposed to bushfire, drought, precipitation and sea level rise. It quantified the value and volume of properties exposed to different climate hazards and assigned standardised risk ratings.
“If you work in financial services, insurance or government, chances are you understand the critical role that a changing climate plays in business, to our customers and the community - both now and into the future. Phenomena like rising sea levels, coastal erosion, bushfires and floods can present a major risk, with potential impacts likely ranging from reduced asset value and credit losses to financial losses due to damaged property and infrastructure,” says Dr Wiart.
Businesses have long factored these events into their risk assessments at an aggregate level. Now they have the power to go deeper. CoreLogic is supporting businesses and government to advance their understanding of the potential impact of climate change on the property market by creating a concurrent view of natural hazards and estimated property values. The hazards can be mapped and can allow for targeted approaches to risk management and customer education.
“While no one knows exactly what tomorrow will bring, access to the right data can provide a strong foundation for informed decision-making in uncertain times. Business leaders and decision makers, for example, may be better equipped to assess climate hazards when they have data that drills down to the level of individual properties. Now, these types of game-changing insights are about to be available in Australia and New Zealand.
“Armed with this information, businesses can employ a sophisticated approach to quantifying climate change impact, enhancing risk management and making informed decisions – each of which can also benefit their customers,” says Dr Wiart.
For more information on CoreLogic's capabilities, visit our Climate Risk Solution page.
About CoreLogic International:
RP Data Pty Ltd t/a CoreLogic Asia Pacific (CoreLogic) is a wholly owned subsidiary of CoreLogic Inc (NYSE: CLGX), one of the largest property data and analytics company in the world. With Australia’s comprehensive property databases, CoreLogic is a leading provider of property data, analytics and related services to consumers, investors, real estate, mortgage, finance, banking, insurance, developers, wealth management and government. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and geo spatial services.
About Munich Re:
Munich Re is one of the world’s leading providers of reinsurance, primary insurance and insurance-related risk solutions. The group consists of the reinsurance and ERGO business segments, as well as the asset management company MEAG. Munich Re is globally active and operates in all lines of the insurance business. Since it was founded in 1880, Munich Re has been known for its unrivalled risk-related expertise and its sound financial position. It offers customers financial protection when faced with exceptional levels of damage – from the 1906 San Francisco earthquake through to the 2019 Pacific typhoon season. Munich Re possesses outstanding innovative strength, which enables it to also provide coverage for extraordinary risks such as rocket launches, renewable energies, cyberattacks, or pandemics. The company is playing a key role in driving forward the digital transformation of the insurance industry, and in doing so has further expanded its ability to assess risks and the range of services that it offers. Its tailor-made solutions and close proximity to its customers make Munich Re one of the world’s most sought-after risk partners for businesses, institutions, and private individuals.
CoreLogic Australia