Shortly after the launch of Terrafirma’s National Ground and Climate Risk Model (NGRM: Climate) in November 2020, the ground and climate risk experts partnered with Hometrack, the leading provider of insight and intelligence to the mortgage market, in the release of their Climate Change Risk product to help lenders understand the impact of climate change on property valuation. 

Hometrack, working with HSBC are delighted to announce that they have won the ‘Best Use of Technology’ award for the Climate Change Risk solution at the Credit Strategy Credit Awards 2021. The product is driven by expertise from flood specialists, Ambiental Risk Analytics, and from Terrafirma, a leading firm of geologists, soil scientists and engineers who are shaping the next generation of ground risk assessment. 

In a successful first year, Terrafirma’s NGRM: Climate is in use by several leading UK banks, building societies and insurers including HSBC, Leeds Building Society, Yorkshire Building Society, Principality Building Society and Virgin Money and provides property-specific information of the physical risks associated with climate change. As well as meeting increasing regulation from the Bank of England, they benefit from unrivalled expertise in ground and climate risk assessment. 

Storm Christoph in early 2021 was one of the wettest storms on record, and more recently Storm Arwen and Storm Barra are stark reminders of the devastating impact storms can have of peoples’ lives, land and infrastructure. Terrafirma have uncovered as a worst-case scenario, approx. 16,500 properties are at risk over the next 60 years from coastal retreat, assuming that there is no active intervention to manage the coast. 

The release of the Bank of England regulatory climate stress testing in June 2021 raised awareness of critical transition and physical ground risks across the financial sector as Terrafirma moved to further strengthen its team of geologists, scientists and geohazard specialists within its climate-risk modelling division. Terrafirma’s new appointments augment its insight across a broad range of ground hazards, including coastal erosion, soil subsidence, landslides, and mining to accurately model and assess the potential impact on the built environment both now, and in the future. 

Uniquely NGRM: Climate shows four climate emission scenarios, meaning every property has a hazard rating derived from its local geology and from climate projections for every decade between 2020s and 2080s. 

With applications across regulatory climate stress testing, risk management, claims and underwriting, NGRM: Climate makes it simple for mortgage lenders, insurers, and reinsurers to understand how the changing nature of ground hazards including coastal erosion, cliff collapse and landslides will impact their residential portfolios. In October 2021 Terrafirma further enhanced its conveyancing report offerings with additional data and information to address the issues presented to consumers by natural ground instability hazards and coastal hazards. 

Terrafirma’s continued research and experienced team are helping financial partners identify risks and discover opportunities for their businesses. Following Terrafirma’s appearance at the ‘Hitting Net Zero through Geospatial Innovation’ conference for COP26 in November, Dr Tim Farewell – one of the UKs leading academics on geohazards and the interaction between the natural and built environment – has been at the forefront of helping to educate financial organisations and property professionals about the risks the ground pose. As part of the education campaign throughout 2021, Dr Farewell has hosted numerous talks at the Managing General Agents Association and Instech London climate change panel. 

Recently chairing a cross-sector roundtable including conveyancing solicitors, mortgage lenders and insurers, Dr Farewell asks the burning questions every legal professional and homeowner should ask to better understand the future of financial and physical risks. Those in attendance considered how prepared the UK property and finance industry is, when understanding their exposure to climate risks and what responsibility they hold when it comes to educating clients about the impact of physical hazards. The full write up will be available in January. 

We would like to take this opportunity to wish all of our clients and partners a very Merry Christmas and a Happy New Year and look forward to working with you in 2022. 

Terrafirma